Note 9. Series C Preferred Stock

Series C Preferred Stock

On May 18, 2026, the Company filed the Certificate of Designation with the Secretary of State of the State of Delaware in connection with the Orphai Acquisition. The Certificate of Designation provides for the authorization of 294,370 shares of Series C Preferred Stock, of which 67,101.235 shares were issued as merger consideration in connection with the Orphai Acquisition, and 144,200.633 shares were issued in the concurrent May 2026 Financing.

Holders of Series C Preferred Stock are entitled to receive dividends on shares of Series C Preferred Stock (on an as-converted basis) equal to and in the same form as dividends paid on shares of the Company's common stock.

Except as otherwise provided in the Certificate of Designation or as otherwise required by the Delaware General Corporation Law of the State of Delaware, the Series C Preferred Stock has no voting rights and no rights to elect directors.

Upon any liquidation, dissolution, or winding-up of the Company, whether voluntary or involuntary, each holder of Series C Preferred Stock is entitled to receive out of the assets of the Company the same amount that a holder of common stock would receive if the Series C Preferred Stock were converted to common stock, paid pari passu with the holders of common stock. If the assets of the Company are insufficient to pay the holders of Series C Preferred Stock in full, all remaining assets of the Company are distributed ratably to the holders of Series C Preferred Stock and the holders of common stock in accordance with their respective amounts.

The Series C Preferred Stock is not redeemable. However, if, at any time after the earlier of (i) stockholder approval of the Company Stockholder Matters or (ii) six months after the initial issuance of the Series C Preferred Stock, the Company fails to deliver conversion shares to a holder as required, the Company is required, at the request of the holder, to pay cash equal to the fair value of such undelivered shares.

Effective upon Stockholder Approval, each share of Series C Preferred Stock will automatically convert into 52.00 shares of Common Stock, as adjusted for the June 2026 Reverse Stock Split. Prior to that, each share of Series C Preferred Stock is convertible into 52.00 shares of Common Stock at the option of the holder, as adjusted for the June 2026 Reverse Stock Split, at any time following the earlier of (i) Stockholder Approval or (ii) six months after the initial issuance of the Series C Preferred Stock.

Given the cash settlement feature described above and the fundamental transaction provisions of the Series C Preferred Stock, the Series C Preferred Stock was classified as mezzanine equity on the condensed consolidated balance sheets.