NOTE 7 – Stockholders’ Equity

Preferred Stock

The Company is authorized to issue up to 10,000,000 shares of preferred stock. This preferred stock may be issued in one or more series, and shall have such designations, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof as shall be determined at the time of issuance by the Company’s board of directors without further action by the Company’s shareholders. As of June 30, 2026 and December 31, 2025, 5,000,000 shares of the Company’s preferred stock have been designated as Series A Convertible Preferred Stock, 2,000,000 shares of the Company’s preferred stock have been designated as Series B Preferred Stock, and 3,000,000 shares of the Company’s preferred stock remain undesignated.

Series A Convertible Preferred Stock

The shares of Series A Convertible Preferred Stock, par value $0.0001 per share, are not mandatorily redeemable and do not embody an unconditional obligation to settle in a variable number of equity shares. As such, the shares of Series A Convertible Preferred Stock are classified as permanent equity on the condensed consolidated balance sheets. The holders’ contingent redemption right in the event of certain deemed liquidation events does not preclude permanent equity classification. Further, the shares of Series A Convertible Preferred Stock are considered an equity-like host for purposes of assessing embedded derivative features for potential bifurcation. The embedded conversion feature is considered to be clearly and closely related to the associated convertible preferred stock host instrument and therefore was not bifurcated from the equity host. As of June 30, 2026 and December 31, 2025, no shares of Series A Convertible Preferred Stock were issued and outstanding.

Series B Preferred Stock

On November 2, 2022, the Company filed a Certificate of Designation of the Series B Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Nevada to create a new class of Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). The Certificate of Designation designated 2,000,000 shares of authorized preferred stock as Series B Preferred Stock. The Series B Preferred Stock was not entitled to receive dividends or any other distributions. The Series B Preferred Stock was entitled to ten votes per share and voted together with the Company’s issued and outstanding shares of common stock as a single class exclusively with respect to a proposal to increase the number of shares of common stock that the Company was authorized to issue, together with any ancillary or administrative matters necessary or advisable in connection with the implementation of such increase. The Series B Preferred Stock had no rights as to any distribution or assets of the Company upon liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company. As of June 30, 2026 and December 31, 2025, no shares of Series B Preferred Stock were issued and outstanding.

Common Shares

2025

On January 7, 2025, the Company issued 3,750,000 common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants (as defined below) for cash proceeds of $5,625,000. See Warrants section below.

On January 13, 2025, the Company entered into a Patent Application Acquisition Agreement with Med30 LLC (the “Seller”), whereby the Seller sold, conveyed, assigned and transferred to the Company all of Seller’s right, title, and interest in and to certain patent applications and associated rights, subject to the terms and conditions set forth in such agreement for a cash payment of $400,000 and the issuance of 450,000 shares of the Company’s common stock. These common shares were valued at $850,500, or $1.89 per share, on the measurement date based on quoted closing price of the Company’s common stock (see Note 4).

On November 8, 2024, the Company entered into the ATM Agreement with Wainwright under which the Company could offer and sell shares of its common stock through Wainwright as the sales agent pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-272620), including an accompanying base prospectus and a prospectus supplement dated November 8, 2024. Sales of shares of the Company’s common stock through Wainwright, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. The aggregate market value of the shares of common stock eligible for sale is currently $5,257,000. From November 8, 2024 through August 13, 2026, the Company sold 9,825,684 shares of common stock through the ATM Agreement which resulted in approximately $13.56 million in gross proceeds.

During the three months ended June 30, 2025, pursuant to the ATM Agreement, the Company issued an aggregate of 63,312 shares of its common stock for net proceeds of $66,101. 

2026

During the three months ended June 30, 2026, pursuant to the ATM Agreement, the Company issued an aggregate of 3,436,991 shares of its common stock for net proceeds of $5,145,579.

On April 1, 2026, the Company entered into a securities purchase agreement (the “Purchase Agreement”) with certain institutional investors, pursuant to which the Company sold to such investors 2,857,144 shares of common stock of the Company at a purchase price of $0.70 per share of common stock. For each share of common stock purchased by the investors, the Company, in a private placement pursuant to the Purchase Agreement, concurrently issued to such investors warrants to purchase one share of common stock at an exercise price of $0.85 per share (the “April 2026 Warrants”). The April 2026 Warrants are exercisable six months from the date of issuance (the “Initial Exercise Date”) for a period of five years from the Initial Exercise Date. Gross proceeds were approximately $2,000,000, and the Company received net proceeds of $1,611,880, after deducting placement agent’s fees and other offering expenses paid by the Company of $388,121. Additionally, in connection with the offering, the Company issued warrants (the “April Placement Agent Warrants”) to the designees of the placement agent, to purchase up to 142,857 shares of common stock. The April Placement Agent Warrants are immediately exercisable at an exercise price of $0.875 per share and expire on April 1, 2031.

On May 14, 2026, the Company issued 500,000 shares of its common stock for business development and consulting services rendered and to be rendered. These shares were valued at $332,950, or $0.67 per common share, based on the closing price of the Company’s common stock on the measurement date, and will be amortized into stock-based consulting fees over the estimated term of the agreement of one year. In connection with the issuance of these shares, during the three and six months ended June 30, 2026, the Company recorded stock-based professional fees of $41,619, and as of June 30, 2026, the Company recorded prepaid expenses of $291,331, which will be amortized over the remaining service period through May 14, 2027.

On June 10, 2026, the Company issued an aggregate of 120,000 shares of its common stock for business development and consulting services rendered and to be rendered. These shares were valued at $159,600, or $1.33 per common share, based on the closing price of the Company’s common stock on the measurement date, and will be amortized into stock-based consulting fees over the term of the agreement of one year. In connection with the issuance of these shares, during the three and six months ended June 30, 2026, the Company recorded stock-based professional fees of $9,975, and as of June 30, 2026, the Company recorded prepaid expenses of $149,625, which will be amortized over the remaining service period through June 10, 2027.

Warrants

On March 27, 2024, as an inducement to exercise certain warrants, the Company issued new unregistered warrants to purchase up to 3,750,000 shares of the Company’s common stock at an exercise price of $1.50 per share (the “April 2024 Inducement Warrants”). On January 7, 2025, the Company issued 3,750,000 common shares in connection with the exercise of the 3,750,000 April 2024 Inducement Warrants for cash proceeds of $5,625,000.

On June 4, 2025, pursuant to a six-month marketing service agreement, the Company issued warrants to purchase up to 300,000 shares of the Company’s common stock at an exercise price of $1.00 per share to a consultant of the Company for investor relations services. The warrants expire on June 4, 2027. The grant date fair value of these warrants was $333,150, which was recorded as a prepaid expense, was expensed as stock-based professional fees over the term of the marketing service agreement. In connection with this warrant, during the three and six months ended June 30, 2025, the Company recorded stock-based professional fees of $55,525 and $55,525, respectively.

On April 2, 2026, in connection with the Purchase Agreement, the Company issued the investors the April 2026 Warrants to purchase up to 2,857,144 shares of common stock at an exercise price of $0.85 per share. The April 2026 Warrants are exercisable six months from the date of issuance for a period of five years from the Initial Exercise Date. Additionally, in connection with the offering, the Company issued April Placement Agent Warrants to the designees of the placement agent to purchase up to 142,857 shares of common stock. The April Placement Agent Warrants are immediately exercisable at an exercise price of $0.875 per share and expire on April 1, 2031.

The measurement of fair value of the April 2026 Warrants and April Placement Agent Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current on April 2, 2026, the date of issuance. The grant date fair value of these April 2026 Warrants and April Placement Agent Warrants was estimated to be $1,389,829 on April 2, 2026 and was reflected within additional paid-in capital as the April 2026 Warrants and April Placement Agent Warrants were determined to be equity classified.

The fair value of the April 2026 Warrants, April Placement Agent Warrants and other warrants were estimated using the Black-Scholes option-pricing model with the following assumptions: 

A summary of warrant activity for the six months ended June 30, 2026 is as follows:

The Company has determined that the warrants should be accounted for as a component of stockholders’ equity.

2018 Equity Incentive Plan

On May 4, 2018, the Company’s board of directors adopted the Rocket One Inc. 2018 Equity Incentive Plan (the “2018 Plan”) initially reserving 40,000 shares of the Company’s common stock for issuance thereunder. The 2018 Plan became effective on May 14, 2018 upon written approval of the 2018 Plan by shareholders holding a majority of the Company’s voting capital. The 2018 Plan provides that on the first day of each fiscal year commencing on January 1, 2019, the share limit (as defined in the 2018 Plan) and the ISO Limit (as defined in the 2018 Plan) shall automatically be increased by that number of shares equal to the lowest of (i) 10,000 shares of common stock, (ii) 5% of the number of shares of the Company’s common stock outstanding as of such date and (iii) an amount determined by the compensation committee of the board of directors (the “Committee”).

The Committee increased the number of shares reserved pursuant to the 2018 Plan by 26,878 shares effective as of January 1, 2021, such that as of January 1, 2021, the Company had an aggregate of 66,878 shares of common stock reserved for issuance pursuant to the 2018 Plan. On June 24, 2021, at the annual meeting of shareholders, shareholders of the Company approved an amendment to the 2018 Plan to further increase the number of shares reserved for issuance thereunder from 66,878 shares to 146,878 shares. On February 2, 2022, the Committee further increased the number of shares reserved for issuance under the 2018 Plan from 146,878 shares to 156,878 shares. On January 11, 2023, the Committee further increased the number of shares reserved for issuance under the 2018 Plan from 156,878 shares to 166,878 shares. On January 4, 2024, the Committee further increased the number of shares reserved for issuance under the 2018 Plan from 166,878 shares to 176,878 shares. On January 6, 2025, the Committee further increased the number of shares reserved for issuance under the 2018 plan from 176,878 shares to 186,878 shares. On January 5, 2026, the Committee further increased the number of shares reserved for issuance under the 2018 plan from 186,878 shares to 196,878 shares. As of June 30, 2026, there were 10,738 shares of Company common stock available for grant under the 2018 Plan.

2022 Equity Incentive Plan

On March 24, 2022, the Company’s board of directors adopted the Rocket One Inc. 2022 Omnibus Equity Incentive Plan (the “2022 Plan”) initially reserving 96,000 shares of the Company’s common stock for issuance thereunder. The 2022 Plan became effective on June 23, 2022 upon approval of the 2022 Plan by the Company’s shareholders at the Company’s annual meeting of shareholders.

On June 2, 2023, the Company’s board of directors approved the Rocket One Inc. Amended and Restated 2022 Omnibus Equity Incentive Plan (the “Amended and Restated 2022 Plan”) which, among other things, increased the number of shares reserved under the plan by 495,317 shares, which Amended and Restated 2022 Plan was approved by stockholders on August 18, 2023.

On May 15, 2024, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 500,000 shares from 591,317 shares to 1,091,317 shares (“2024 Increase”). The 2024 Increase was approved by shareholders of the Company on August 7, 2024.

On May 9, 2025, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 2,000,000 shares from 1,091,317 shares to 3,091,317 shares (“2025 Increase”). The 2025 Increase was approved by shareholders of the Company on August 5, 2025.

On April 30, 2026, the Committee recommended, and the board of directors approved an increase to the number of shares of common stock reserved for issuance under the Amended and Restated 2022 Plan by 3,250,000 shares from 3,091,317 shares to 6,341,317 shares (“2026 Increase”). The 2026 Increase remains subject to shareholder approval.

As of June 30, 2026, there were 31,317 shares of Company common stock available for grant under the Amended and Restated 2022 Plan.

Stock Options

On January 14, 2025, pursuant to the 2018 Plan, the Company issued options to the Company’s Chief Executive Officer to purchase up to 93,000 shares of the Company’s common stock at an exercise price of $1.55 per share. Additionally, on January 14, 2025, pursuant to and subject to the available number of shares reserved under the Amended and Restated 2022 Plan, the Company issued options to the Company’s Chief Executive Officer and an employee to purchase up to an aggregate of 77,000 shares of the Company’s common stock at an exercise price of $1.55 per share. The options vested immediately in full upon grant and expire on January 14, 2035. The aggregate grant date fair value of these options was $219,929, which was recorded as stock-based compensation in January 2025.

On May 26, 2026, pursuant to the 2022 Plan, the Company issued options to the Company’s Chief Executive Officer, employees and directors to purchase up to an aggregate of 1,050,000 shares of the Company’s common stock at an exercise price of $0.7083 per share. The options vested immediately in full upon grant and expire on May 26, 2036. The aggregate grant date fair value of these options was $625,485, which was recorded as stock-based compensation in May 2026.

The fair value of option grants was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

A summary of option activity under the Company’s equity incentive plans for the six months ended June 30, 2026 is presented below:

A summary of stock options outstanding as of June 30, 2026 by price range is as follows:

All stock compensation associated with the amortization of employee stock option expense was recorded as a component of general and administrative expenses in the unaudited condensed consolidated statements of operations and comprehensive loss.

Estimated future stock-based compensation expense relating to unvested stock options is $0.

Stock-Based Compensation

Stock-based compensation expense for the three and six months ended June 30, 2026 and 2025 was as follows:

For the three and six months ended June 30, 2026 and 2025, the amount of stock-based compensation expense included within research and development and general and administrative expenses was as follows: