9. STOCKHOLDERS’ EQUITY

Authorized Capital Stock

The certificate of incorporation adopted on August 5, 2024, in connection with the Merger, authorized 110,000,000 shares, of which 100,000,000 shares are common stock with a par value of $0.0001, and 10,000,000 shares are preferred stock with a par value of $0.0001. On April 7, 2025, pursuant to Board and stockholder approval, the Company amended its Certificate of Incorporation to increase the authorized shares of common stock from 100,000,000 shares to 400,000,000 shares.

Common Stock Offerings

July 2025 Offering

On July 17, 2025, we sold 6,818,182 shares of common stock and warrants to purchase 6,818,182 shares of common stock, at $1.32 per share and accompanying warrant. The immediately exercisable five-year warrants had an initial exercise price of $1.32 per share. In connection with the December 10, 2025 offering (discussed below), we agreed to reduce the exercise price of the 6,818,182 warrants to $1.09 per share and extended the expiration date to January 20, 2031. Gross proceeds from the offering were approximately $9.0 million and net proceeds were $7,546,988, after deducting placement agent fees and other offering expenses. The estimated fair value of the warrants issued to the investors on July 17, 2025 was approximately $8,197,000. The estimated fair value of the repriced warrants issued to the investors as of December 8, 2025 was approximately $5,301,000. On May 6, 2026, all of the warrants were repriced to $0.90 per share and exercised in connection with the warrant inducement transaction. The estimated fair value of the repriced warrants issued to the investors as of May 6, 2026 was approximately $4,598,000.

In July 2025, we paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $125,000 and granted the placement agent warrants to purchase 272,727 shares of common stock at an exercise price of $1.65 per share. The warrants are exercisable commencing on January 17, 2026 and expire on July 17, 2030. We also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase up to 477,273 shares of common stock at an exercise price of $1.65 per share. The placement agent warrants are exercisable commencing on August 17, 2025 and expire on July 17, 2030. The estimated fair value of the placement agent warrants was approximately $905,000.

September 2025 Offering

On September 10, 2025, we sold 5,142,858 shares of common stock and warrants to purchase 5,142,858 shares of common stock at $1.75 per share and accompanying warrant. The warrants are exercisable beginning on March 10, 2026 and expire on March 10, 2031 and had an initial exercise price of $1.84 per share. In connection with the December 10, 2025 offering (discussed below), Citius Oncology agreed to reduce the exercise price of the 5,142,858 warrants to $1.09 per share and extended the expiration date to January 20, 2031. Gross proceeds from the offering were approximately $9.0 million and net proceeds were $7,619,854, after deducting placement agent fees and other offering expenses. The estimated fair value of the warrants issued to the investors on September 10, 2025 was approximately $6,995,000. The estimated fair value of the repriced warrants issued to the investors as of December 8, 2025 was approximately $4,179,000. On May 6, 2026, all of the warrants were repriced to $0.90 per share and exercised in connection with the warrant inducement transaction. The estimated fair value of the repriced warrants issued to the investors as of May 6, 2026 was approximately $3,468,000.

In September 2025, we paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $125,000. Additionally, we issued the placement agent warrants to purchase 205,714 shares of common stock at an exercise price of $1.92 per share. The warrants are exercisable commencing on March 10, 2026 and expire on March 10, 2031. We also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase up to 360,000 shares of common stock at an exercise price of $2.1875 per share. The placement agent warrants are exercisable commencing on March 10, 2026 and expire on March 10, 2031. The estimated fair value of the placement agent warrants was approximately $717,000.

December 2025 Offering

On December 10, 2025, we sold 1,284,404 shares of common stock and accompanying warrants to purchase 1,284,404 shares of common stock, at $1.09 per share and accompanying warrant, and additionally sold 15,229,358 pre-funded warrants and accompanying warrants to purchase 15,229,358 shares of common stock at $1.0899 per pre-funded warrant and accompanying warrant. Aggregate gross proceeds from the offering were approximately $18.0 million and net proceeds were $15,062,724, after deducting placement agent fees and other offering expenses. The 15,229,358 pre-funded warrants are immediately exercisable at $0.0001 per share and do not expire. During the nine months ended June 30, 2026, 8,183,358 of the pre-funded warrants were exercised for net proceeds of $818. At June 30, 2026, 7,046,000 of the pre-funded warrants remain outstanding. The 16,513,762 warrants have an exercise price of $1.09 and are exercisable for five years after stockholder approval, which was effective on February 18, 2026. The estimated fair value of the 16,513,762 warrants issued to the investors was approximately $13,196,000. On May 6, 2026, all of the warrants were repriced to $0.90 per share and warrants to purchase 816,738 shares were exercised in connection with the warrant inducement transaction and warrants to purchase 15,697,024 remain outstanding. The estimated fair value of the repriced warrants issued to the investors as of May 6, 2026 was approximately $11,136,000.

In December 2025, we paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $135,000. Additionally, we issued to the placement agent warrants to purchase 1,155,963 shares of common stock at an exercise price of $1.3625 per share. The warrants are exercisable commencing on stockholder approval, which was effective on February 18, 2026, and expire on December 8, 2030. We also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase up to 660,550 shares of common stock at an exercise price of $1.199 per share. The placement agent warrants are exercisable commencing on stockholder approval and expire on December 8, 2030. The estimated fair value of the placement agent warrants was approximately $1,401,000.

May 2026 Warrant Inducement Transaction

On May 5, 2026, we entered into an agreement with the holder of certain existing warrants to purchase 12,777,778 shares of common stock at $0.90 per share, which consists of all of the 6,818,182 warrants issued in July 2025, all of the 5,142,858 warrants issued in September 2025, and 816,738 warrants issued in December 2025, each with an exercise price of $1.09 per share. Exercise of the warrants for cash is subject to a beneficial ownership limitation of 9.99%. If the beneficial ownership limitation applies, the issuance of the shares of common stock are held in abeyance until compliance with the beneficial ownership limitation.

As an inducement to the holder for exercising the 12,777,778 warrants in cash at a reduced exercise price of $0.90 per share, we issued to the holder new five-year warrants to purchase 25,555,556 shares at $0.90 per share. Net proceeds were $9,730,000, after deducting placement agent fees and expenses of $1,770,000. The incremental fair value of the modified warrants totaled approximately $1,109,000. The estimated fair value of the 25,555,556 warrants issued to the investors was approximately $17,233,000. The combined fair value of $18,342,000 was recognized as an equity issuance cost within additional paid-in capital with no impact on total stockholders’ equity.

We paid the placement agent a fee of 7.0% of the gross proceeds and expenses of $85,000. Additionally, we issued placement agent warrants to purchase 894,444 shares at $1.125 per share. We also paid an additional 7.0% cash fee to a prior placement agent and issued warrants to purchase 511,111 shares at $1.199 per share. The placement agent warrants are exercisable commencing on June 18, 2026, and expire on June 18, 2031. The estimated fair value of the placement agent warrants was approximately $903,000.

Stock Plans

Under the Citius Oncology 2023 Omnibus Stock Incentive Plan, adopted on April 29, 2023, we reserved 15,000,000 common shares for issuance. On August 2, 2024, we reserved 15,000,000 common shares for issuance under the Citius Oncology 2024 Omnibus Stock Incentive Plan (the “2024 Plan”). We amended the 2024 Plan on October 27, 2025 to reserve an additional 15,000,000 shares of common stock for an aggregate of 30,000,000 shares of common stock. The stock plans provide incentives to employees, directors, and consultants through grants of options, SARs, dividend equivalent rights, restricted stock, restricted stock units, or other rights.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. Volatility is estimated using the trading activity of Citius Pharma common stock until such time as we have sufficient history. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant commensurate with the expected term assumption. The expected term of stock options granted to employees and directors, all of which qualify as “plain vanilla,” is based on the average of the contractual term (generally 10 years) and the vesting period. For non-employee options, the expected term is the contractual term.

A summary of option activity under the stock plans is presented below:

Stock-based compensation expense for stock options for the three months ended June 30, 2026 and 2025 was $1,858,443 and $2,125,237, respectively. Stock-based compensation expense for stock options for the nine months ended June 30, 2026 and 2025 was $5,968,921 and $6,022,287, respectively.

At June 30, 2026, unrecognized total compensation cost related to unvested awards under our stock option plans of $1,726,594 is expected to be recognized over a weighted average period of 1.42 years.

Restricted Stock Units

On September 19, 2025, the Board of Directors granted restricted stock units of 11,600,000 shares of common stock to employees and directors. The restricted stock units vest on September 19, 2028. The fair value of the common stock on the date of grant was $20,300,000 ($1.75 per share). On March 24, 2026, the Board of Directors granted restricted stock units of an aggregate 350,000 shares of common stock to an employee and a consultant. The restricted stock units vest on March 24, 2029. The fair value of the common stock on the date of grant was $203,000 ($0.58 per share).

Stock-based compensation expense for restricted stock units for the three months ended June 30, 2026 was $1,702,348. Stock-based compensation expense for restricted stock units for the nine months ended June 30, 2026 was $5,074,630.

At June 30, 2026, unrecognized total compensation cost related to unvested restricted stock units of $15,224,629 is expected to be recognized over a weighted average period of 2.23 years.

Warrants

We have reserved 53,947,473 shares of common stock for the exercise of outstanding warrants. The following table summarizes the warrants outstanding at June 30, 2026:

At June 30, 2026, the weighted average remaining life of the outstanding warrants was estimated at 4.23 years and all warrants are exercisable. At June 30, 2026 the aggregate intrinsic value of the warrants outstanding was $4,579,195.

Common Stock Reserved

A summary of common stock reserved for future issuances by the Company as of June 30, 2026 is as follows: