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

6. Stockholders’ Equity

 

Preferred Stock

 

The Company is authorized to issue a total of 10,000,000 shares of preferred stock, par value $0.0001 per share. As of June 30, 2026 and December 31, 2025 the Company had 10,000,000 and 7,576,870 shares respectively, of undesignated preferred stock.

 

 

On July 1, 2025, the Company filed amendment to Certificate of Incorporation by filing Certificate of Designations, Preferences, Rights and Limitations of its Series B Convertible Preferred Stock with the Delaware Secretary of State. The Company has designated a total of 3,573,130 shares as Series B Convertible Preferred Stock with a stated value of $0.7146 per share. The Preferred Shares bear an 8% per annum cumulative dividend non-compounding and payable at conversion either in cash or, at the holder’s election, in shares of common stock valued at the then effective conversion rate.

 

Common Stock

 

The Company is authorized to issue a total of 100,000,000 shares of common stock, par value $0.0001 per share. As of June 30, 2026 and December 31, 2025, the Company had 15,417,444 shares and 8,790,102 shares, respectively, of common stock issued and outstanding.

 

2026 common stock transactions

 

Shares issued for services

 

On January 6, 2026, the Company entered into a consulting agreement with Pillow Hog Ventures, Inc (“PHVC”) for marketing and strategic consulting services. The agreement is for a term of six months ending June 30, 2026. In January 2026, the Company issued 15,000 shares of the Company’s common stock with a fair value of $53,400 to PHVC for the consulting services.

 

Exercise of Preferred Series B Stock

 

During January and February 2026, holders of the Company’s Preferred Series B stock converted an aggregate of 2,423,130 preferred shares, together with accrued dividends of $86,955, into 2,544,821 shares of the Company’s common stock. As of June 30, 2026, no Preferred Series B shares remained outstanding.

 

Exercise of Pre-Funded Warrants

 

During the six months ended June 30, 2026, warrant holders exercised 614,880 pre-funded warrants resulting in the issuance of 614,880 shares of the Company’s common stock. 

 

June 2026 registered direct offering

 

On June 2, 2026, the Company entered into a securities purchase agreement with certain institutional and accredited investors for the sale, in a registered direct offering, of shares of common stock and, in lieu of shares for certain investors, pre-funded warrants to purchase common stock.

 

The Company sold and issued 2,366,499 shares of common stock and pre-funded warrants to purchase 258,859 shares of common stock, at a purchase price of $6.31 per share and $6.3099 per pre-funded warrant, resulting in net proceeds of $16,433,526 after deducting offering expenses of $132,500. The Company intends to use the net proceeds for general corporate purposes, including working capital.

 

The pre-funded warrants are exercisable immediately upon issuance at an exercise price of $0.0001 per share and expire when exercised in full. Because the holders paid substantially all of the purchase price at issuance and the remaining exercise price is nominal, the pre-funded warrants are economically equivalent to outstanding shares of common stock. The pre-funded warrants are indexed to the Company’s own stock, require physical settlement in shares, contain no provision that could require net cash settlement, and accordingly meet the criteria for equity classification under ASC 815-40. Accordingly, gross proceeds allocated to the pre-funded warrants of $1,633,527 were recorded in additional paid-in capital. The pre-funded warrants are presented separately from the Company’s standard common stock warrants in the tables above, consistent with the Company’s presentation policy. No common stock purchase warrants were issued in connection with the offering.

   

2025 common stock transactions

 

February 2025 equity offering

 

Effective February 13, 2025, the Company closed a registered direct offering with certain investors which resulted in gross proceeds of $1,050,003. After deducting placement agent fees and direct offering expenses of $135,775, the Company received net proceeds of $914,228. The Company sold and issued 434,784 shares of common stock at $2.415 per share. In a concurrent private placement, the Company also issued warrants to purchase 434,784 shares of common stock at an exercise price of $2.29 per share, exercisable immediately and expire five years from the date of issuance. The Company also granted the placement agent warrants to purchase 32,609 shares of common stock at $3.0188 per share, expiring February 11, 2030.

 

All warrants issued in the February 2025 equity offering include customary anti-dilution adjustments and a “fundamental transaction” provision. If a qualifying fundamental transaction within the Company’s control is consummated, holders may elect cash settlement equal to the Black-Scholes value. For fundamental transactions outside the Company’s control, holders are entitled to receive the same consideration as common shareholders. The warrants are classified in permanent equity. Any future cash settlements will be accounted for as equity distributions upon occurrence of the related fundamental transaction.

 

 

Common Stock Warrants

 

A summary of common stock warrant activity, including warrants to purchase common stock that were issued in conjunction with the Company’s public offerings, but excluding pre-funded warrants, for the six months ended June 30, 2026 is presented below.

 

 

   Number of Shares   Weighted Average Exercise Price   Weighted Average Remaining Contractual Life (in Years) 
Warrants outstanding at December 31, 2025   8,512,614    1.91      
Issued   -           
Exercised   (817,392)   1.34      
Expired   (11,331)   37.00      
Warrants outstanding at June 30, 2026   7,683,891   $1.92    3.89 

 

At June 30, 2026, the outstanding warrants are exercisable at the following prices per common share:

 

Exercise Price   Warrants Outstanding (Shares) 
$1.0000    5,755,214 
$2.2900    197,392 
$3.0188    32,609 
$3.9600    1,051,342 
$6.0000    583,334 
$6.6000    35,000 
$20.0000    29,000 
      7,683,891 

 

During the periods presented, the Company issued pre-funded warrants, each of which is exercisable immediately upon issuance at a de minimis exercise price of $0.00001 per share. Because the holders have already paid substantially all of the purchase price at issuance and the remaining exercise price is nominal, the pre-funded warrants are economically equivalent to outstanding common shares. The pre-funded warrants meet the criteria for equity classification. The warrants are indexed to the Company’s own stock, require physical settlement in shares, and do not include features that could require cash settlement.

 

Due to their economic characteristics, pre-funded warrants function as share-like instruments, rather than traditional warrants with a substantive exercise price or term. Therefore, including them together with standard warrants in the warrant rollforward would significantly distort both the weighted-average exercise price and the weighted-average remaining contractual life, rendering those disclosures not meaningful. As a result, the Company presents pre-funded warrants separately from standard common stock warrants in the tables below. The pre-funded warrants are excluded from weighted-average exercise price and remaining life due to their de-minimis strike price and share-like characteristics.

 

The following table presents a summary of activities related to pre-funded warrants for the six months ended June 30, 2026:

 

 

   Number of Shares 
Pre-funded warrants outstanding at December 31, 2025   545,521 
Issued   258,859 
Exercised   (614,880)
Expired   - 
Pre-funded warrants outstanding at June, 2026   189,500 

 

The following table presents a summary of total number of common stock warrants and pre-funded warrants outstanding as of June 30, 2026:

 

Warrant Type 

Warrants Outstanding

(Shares)

 
Common stock warrants   7,683,891 
Pre-funded warrants   189,500 
Total warrants outstanding   7,873,391