v3.26.1
Stockholders’ Equity
 6 Months Ended
Jun. 30, 2026
Equity [Abstract]  
Stockholders’ Equity

4. Stockholders’ Equity

 

On April 21, 2026, the Company entered into securities purchase agreements (the “Agreements”) with certain accredited investors (the “Investors”) pursuant to which the Company agreed to sell and issue to the Investors in a private placement offering (the “Offering”), an aggregate of 17,500,000 shares of common stock, par value $0.0001 per share (the “Common Stock”) at an offering price of $0.04 per share for gross proceeds of $700,000.

 

Series A Convertible Preferred Stock

 

Each share of the Series A is convertible at the option of the holder into the number of shares of common stock determined by dividing the stated value of such share by the conversion price that is subject to adjustment. As of June 30, 2026, there were 85,581 shares outstanding. During the three and six months ended June 30, 2026 and 2025, no shares of the Series A were converted. If we sell common stock or equivalents at an effective price per share that is lower than the conversion price, the conversion price may be reduced to the lower conversion price. The Series A will be automatically convertible into common stock in the event of a fundamental transaction as defined in the offering agreements.

 

Series C Convertible Preferred Stock Issuance

 

As of June 30, 2026, there were 1,688 shares outstanding. There were no conversions for the three and six months ended June 30, 2026 and 2025. Each share of Series C is convertible into common stock at any time at the option of the holder thereof at the conversion price then in effect. The conversion price for the Series C is determined by dividing the stated value of $1,000 per share by $0.0092 per share (subject to adjustments upon the occurrence of certain dilutive events).

 

Common Stock and Warrant Offering

 

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. This method of valuation involves using inputs such as the fair value of our common stock, historical volatility, the contractual term of the warrants, risk-free interest rates and dividend yields. Due to the nature of these inputs, the valuation of the warrants is considered a Level 2 measurement (see Note 6). The following assumptions were used to measure the Series A and Series B-1 Warrants as of June 30, 2026 and December 31, 2025.

 Schedule of Assumptions Used to Calculate Fair Value of Liability

   June 30,   December 31, 
   2026   2025 
Stock price  $0.07   $0.06 
Expected warrant term (years)   2.6 years    3.1 years 
Risk-free interest rate   4.15%   3.64%
Expected volatility   200.48%   171.05%
Dividend yield   —    — 

 

 

HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The exercise price, amount of warrants outstanding and fair value for all warrants as of June 30, 2026 and December 31, 2025 are as follows:

 

Schedule of Warrants Outstanding and Fair Value for Warrants 

   Exercise Price   Warrants Outstanding   Fair Value   Exercise Price   Warrants Outstanding   Fair Value 
   June 30, 2026   December 31, 2025 
   Exercise Price   Warrants Outstanding   Fair Value   Exercise Price   Warrants Outstanding   Fair Value 
Series A Warrants  $95.50    19,608    —   $95.50    19,608    — 
Series B-1 Warrants  $95.50    14,706    —   $95.50    14,706    — 
2025 Series A Warrants  $3.22    3,443,461   $156,164   $3.22    3,443,461   $103,022 
Total        3,477,775   $156,164         3,477,775   $103,022 

 

On January 23, 2025, we consummated a “best efforts” public offering of 553,846 shares of common stock (or pre-funded warrants in lieu thereof) with each share of common stock (or pre-funded warrant) accompanied by (i) a series A common warrant to purchase one (1) common share at an exercise price of $20.00 per share and (ii) a series B common warrant to purchase one (1) common share at an exercise price of $20.00 per share. The exercise periods for the Series A and B warrants are five years and two and half years, respectively. The Series B warrants have an alternate cashless exercise of one warrant for three common shares.

 

The Company accounted for Series A and Series B warrants as liability awards and the Pre-Funded Warrant as a permanent equity, using an allocation of 75% for the liability and 25% for the equity components. A total of $2.3 million was recorded to permanent equity for the common stock and pre-funded warrants. The Series A and Series B Warrants were recorded at fair value on the date of issuance, and remeasured at fair value at the balance sheet date, with changes in fair value recorded to earnings. The Series A and Series B Warrant liabilities were assessed to be $1.3 million and $5.4 million, respectively, on the day of the transaction. As of December 31, 2025, a total of 10,173,402 Series B warrants were exercised and converted into common shares. As of June 30, 2026, none of the Series A warrants have been exercised, and the fair value of the Series A warrant liability was approximately $0.2 million. The total number of unexercised Series A warrants as of June 30, 2026 was 3,443,461. All of the pre-funded warrants were exercised as of March 31, 2025.

 

As part of the transaction, the Company incurred equity issuance costs of $0.8 million related to advisory and legal fees directly attributable to the issuance of the common stock from the Series A and Series B Warrant Agreement, which were allocated at $0.2 million and $0.6 million against additional paid-in-capital and warrant liability (expensed to change in fair value), respectively.

 

The combined offering price of each share of common stock together with the accompanying Series A and Series B common warrants is $16.250, and the combined offering price of each pre-funded warrant, all of which were exercised as of April 2, 2025, together with the accompanying series A and series B common warrants is $16.245. The gross proceeds of the public offering were approximately $9.0 million before deducting placement agent fees and offering expenses and were used to repay certain indebtedness ($2.9M note payable) and expected to be used for general corporate purposes, including working capital, operating expenses and capital expenditures.

 

The Series B warrants contained certain volume weighted average price provisions that reset the exercise price to a minimum floor price of $3.22 and also resets the number of warrants to 3,406,390 which are exercisable into 10,173,402 common shares.

 

As of April 4, 2025 all of the Series B warrants were exercised into common shares at a weighted average reset price of $3.27. Since the Series B warrants were exercised on a cashless basis, there were no proceeds to the company. No Series A warrants were exercised, however the reset provisions increased the amount of Series A warrants such that 3,443,461 are outstanding at an exercise price of $3.22.

 

 

HEPION PHARMACEUTICALS, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The fair value of these liability classified warrants was estimated using the Black-Scholes option pricing model. This method of valuation involves using inputs such as the fair value of our common stock, historical volatility, the contractual term of the warrants, risk-free interest rates and dividend yields. Due to the nature of these inputs, the valuation of the warrants is considered a Level 2 measurement (see Note 6). The following assumptions were used to measure the 2025 Series A.

 

   2025 Series A Warrants 
   June 30,   December 31,   January 23, 
   2026   2025   2025 
Stock price  $0.07   $0.06   $10.00 
Expected warrant term (years)   3.7 years    4.2 years    5.1 years 
Risk-free interest rate   4.17%   3.64%   4.12%
Expected volatility   184.34%   151.25%   114.0%
Dividend yield   —    —    — 

 

The Series B Warrants are exercisable on a cashless basis for a quantity equal to three times the gross quantity of shares underlying the warrants, and there is no exercise price associated with a cashless exercise (including no exercise price incorporated into the calculation of shares issuable under the cashless exercise). To calculate the fair value, we performed a back solve at inception that contemplated a DLOM and dilution adjustments. The fair value of the Series B warrants as of January 23, 2025 was $5.4 million.

 

The following table sets forth the components of changes in our derivative financial instruments liability balance for the six months ended June 30, 2026.

 

Date  Number of
Warrants
Outstanding		  

Derivative
Instrument

Liability

 
Balance of derivative liability at December 31, 2025   3,477,775   $103,022 
Change in fair value of warrants   —    53,142 
Balance of derivative liability at June 30, 2026   3,477,775    156,164