4. Warrants and Equity

Warrant and Stock Issuances

During June of 2026, Series H warrants were exercised for the issuance of 1,396,500 shares at $2.01 per share for proceeds of approximately $2.8 million.

On February 19, 2026, the Company entered into warrant inducement agreements with certain holders of our existing equity-classified Series E and Series F warrants. Pursuant to the agreements, the holders exercised warrants to purchase an aggregate of 2,122,652 shares of the Company’s common stock at an exercise price of $3.90 per share, resulting in aggregate gross proceeds of approximately $8.3 million. In consideration for such exercises, the Company issued new Series H warrants to purchase up to 6,367,956 shares of common stock. The Series H warrants have a five-year term and had an initial exercise price of $2.3976 per share. The warrants contain customary anti-dilution adjustments and beneficial ownership limitations and became exercisable upon stockholder approval in April 2026. As a result of the completion of this transaction, the exercise price of the Company’s outstanding Series E warrants was adjusted to $3.00 per share, and the number of shares underlying the remaining outstanding Series E warrants increased, in each case pursuant to the anti-dilution provisions contained in such warrants. In addition, the exercise price of the Company’s outstanding Series F warrants was adjusted to $2.75 per share, and the exercise price of the Company’s outstanding Series G warrants was adjusted to $2.3976 per share.

During the six months ended June 30, 2026, the Company recorded deemed dividends resulting from the downward adjustment to the exercise price of certain warrants and the increase in the number of shares underlying certain outstanding warrants, in each case triggered by the anti-dilution provisions contained in the original warrant agreements. The deemed dividends were recorded to additional paid-in capital and recognized as a reduction to income available to common stockholders.

Warrants

The Company uses the Monte Carlo simulation model to reflect the impact of the down round feature to the warrants and also uses a Black-Scholes option pricing model (BSM) to determine the fair value of its liability warrants at each reporting date, the date of issue and any other measurement date during the quarter. The risk-free interest rate assumption is based upon observed interest rates on zero coupon US Treasury bonds linearly interpolated to obtain a maturity period commensurate with the term of the warrants. Estimated volatility is a measure of the amount by which the Company's stock price is expected to fluctuate each year during the expected life of the warrants.

Liability Classified Warrants

The assumptions used in determining the fair value of the Company's outstanding liability classified warrants are as follows:

A summary of the Company's liability classified warrant activity during the six months ended June 30, 2026 and related information follows: 

For a summary of the changes in fair value and the impact of changes in accounting policy associated with the Company's warrant liability for the six months ended June 30, 2026, see Note 2 - Basis of presentation, principles of consolidation and significant accounting policies and liquidity.

Equity Classified Warrants

A summary of the Company's equity classified warrant activity during the six months ended June 30, 2026 and related information follows: 

At Market Issuance Sales Agreement (ATM) 

On December 23, 2025, the Company increased the maximum aggregate gross sales price of the Company’s common stock that may be offered, issued and sold under a certain At Market Offering Agreement (2025 ATM Agreement) with Roth Capital Partners, LLC (Roth), which the Company initially entered into in July 2025, from $6.5 million to $8.2 million. Pursuant to the terms of the 2025 ATM Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $8.2 million from time to time through or to Roth, acting as sales agent or principal. Roth may sell shares of the Company’s common stock in negotiated transactions at market prices prevailing at the time of sale or at prices related to such prevailing market prices, and either party may terminate the 2025 ATM Agreement upon two business days’ notice.

The Company paid Roth a commission equal to 3.0% of the gross proceeds from any shares of common stock sold under the 2025 ATM Agreement, in addition to reimbursing certain expenses. The 2025 ATM Agreement will terminate upon the sale of shares having an aggregate offering price equal to the maximum amount authorized under the agreement. During the first quarter of 2026, the Company sold 3,785 shares of common stock pursuant to the 2025 ATM Agreement for gross proceeds of approximately $18,000. 

During May 2026, the Company sold an additional 354,757 shares of common stock pursuant to the 2025 ATM Agreement for net proceeds of approximately $0.8 million. The lowest price of the shares sold was $2.01. As a result and due to provisions in certain warrants, deemed dividends of $0.3 million were recorded as a reduction to income available to common stockholders.