Note 3 - Reverse Recapitalization and Private Placement

In connection with the Merger, the issued and outstanding shares of Private Blue Laser Fusion capital stock and options to purchase Private Blue Laser Fusion common stock were converted into the right to receive shares or options of the Company at the Exchange Ratio of approximately 0.6314 based on the following events contemplated by the Merger Agreement and effected at the Closing:

 

 

 

 

The 1,000,000 shares of Unite common stock outstanding immediately prior to the Merger, of which 995,000 shares were held by Lucius Partners LLC (“Lucius Partners”), the principal stockholder of Unite, remained outstanding as shares of Common Stock following the Merger (see Note 11).

Concurrently with the Closing, the Company completed the initial closing of a private placement of 910,265 shares of Common Stock at $27.50 per share for gross proceeds of approximately $25.0 million, and on September 30, 2026 completed a second closing of 122,285 shares at $27.50 per share for gross proceeds of approximately $3.4 million (together, the “Offering”). The Company incurred approximately $4.7 million of transaction costs in connection with the Offering, consisting of placement agent fees and expenses of $3.4 million paid to the placement agent, Laidlaw & Company (UK) Ltd. (“Laidlaw”), legal, escrow, accounting and other professional fees, including $0.7 million of deferred transaction costs capitalized as of June 30, 2026 and were reclassified to additional paid-in capital at the Closing (see Note 2), all of which were recorded as a reduction of additional paid-in capital, and none of which were expensed. As of September 30, 2026, $0.9 million of these transaction costs remained unpaid and were included in accounts payable and accrued expenses. Following the Closing, the Company paid $0.8 million to settle all liabilities of Unite assumed in the Merger ($150 thousand of which was paid from the Offering escrow account), including $336 thousand to repay Unite’s unsecured promissory note payable to Lucius Partners Opportunity Fund, LP, consisting of $275 thousand of principal and $61 thousand of accrued interest. No liabilities of Unite remained unpaid as of September 30, 2026. The Company received net proceeds of approximately $23.7 million from the Offering after transaction costs.

 

The Merger was accounted for as a reverse recapitalization. Under this method of accounting, Unite, a shell company that did not meet the definition of a business under ASC 805, is treated as the acquired company and the Merger is treated as the equivalent of Private Blue Laser Fusion issuing shares for the net liabilities of Unite, accompanied by a recapitalization. The accounting acquirer was determined primarily on the basis that the former stockholders of Private Blue Laser Fusion hold the largest voting interest in the Company and the ability to appoint a majority of the board of directors, and that Private Blue Laser Fusion’s management holds the executive management roles of the Company and is responsible for its operations, which consist of Private Blue Laser Fusion’s activities.

The net liabilities of Unite of $780 thousand, consisting of a note payable and accrued interest of $336 thousand due to Lucius Partners Opportunity Fund, LP, loans payable of $95 thousand due to Lucius Partners LLC, accrued administrative and director fees of $27 thousand and accrued professional fees of $322 thousand, were recognized at historical cost as of the Closing, with no goodwill or other intangible assets recorded. Operations prior to the Merger are those of Private Blue Laser Fusion, and the accumulated deficit and accumulated other comprehensive loss of Private Blue Laser Fusion have been carried forward after the Closing. The Merger affects the presentation of equity in two respects. First, the historical common shares of Private Blue Laser Fusion and related per share and stock option amounts have been retroactively recast at the Exchange Ratio: the 5,752,800 and 5,745,000 shares previously reported at December 31, 2025 and 2024 are presented as 3,632,165 and 3,627,242 shares of Common Stock, respectively. The recast is shown as a separate line in the condensed consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit) and does not change any carrying amounts. Second, the convertible preferred stock was not retroactively recast and continues to be presented in temporary equity, at its historical share counts and carrying value, for all periods prior to the Closing Date. On the Closing Date, the Preferred Conversion was recorded by reclassifying

Placement Agent Warrants

In connection with the initial closing of the Offering, the Company became obligated to issue to Laidlaw warrants to purchase 101,619 of $33.00

Rollover Options

The conversion of the Private Blue Laser Fusion options into the Rollover Options was accounted for as a modification under ASC 718. Because the number of shares and exercise price were adjusted proportionately by the Exchange Ratio and no other terms changed, no incremental compensation cost was recognized, and the remaining unrecognized compensation cost continues to be recognized over the original requisite seice periods (see Note 10).

 

The number of shares of Common Stock issued and outstanding following the consummation of the Merger and the Offering was as follows:

 

Preferred Stock

The Series and Series Convertible Preferred Stock of Private Blue Laser Fusion is presented in temporary equity at its historical carrying value of $38.2 million and historical share counts in the condensed consolidated balance sheet as of December 31, 2025 and, for periods prior to the Closing, in the condensed consolidated statements of changes in convertible preferred stock and stockholders’ equity (deficit). The carrying value represents net proceeds of approximately $38.2 million from the issuance of 3,876,721 shares of Series Convertible Preferred Stock for cash at $9.76 per share and 64,065 shares of Series Convertible Preferred Stock issued in July 2023 at $7.80 per share upon the conversion of a $0.5  simple agreement for future equity (“SAFE”) entered into in December 2022, net of issuance costs of approximately $0.1 million. ThePreferred Conversion was recorded on the Closing Date, and no convertible preferred stock was outstanding as of September 30, 2026.