Stockholders’ Equity (Deficit) |
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Sep. 30, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity (Deficit) [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ Equity (Deficit) | Note 8 - Stockholders’ Equity (Deficit)
Preferred Stock
As of September 30, 2026, the Company was authorized to issue 1,000,000 shares of preferred stock, with a par value of $0.0001 per share, of which 130,000 shares were designated as Series A Non-Voting Convertible Preferred Stock pursuant to the Company’s July 31, 2026 Certificate of Designation. The remaining 870,000 authorized preferred shares are undesignated, with undesignated preferred shares issued or outstanding as of September 30, 2026.
On July 31, 2026, as consideration for the G3 Call Option, the Company issued an aggregate of 52,903.566 shares of Series A Non-Voting Convertible Preferred Stock. See Note 7 for further details on the G3 Call Option.
During August 2026, the Company entered into agreements with certain financial advisors, vendors, employees and holders of outstanding notes pursuant to which the Company settled certain outstanding liabilities through the issuance of Series A Non-Voting Convertible Preferred Stock. In the aggregate, the Company issued 5,929.293 shares of Series A Non-Voting Convertible Preferred Stock at fair value of $3.1 million upon settlement of approximately $6.3 million of outstanding liabilities, consisting of approximately $4.9 million owed to financial advisors and vendors, $0.7 million of accrued employee bonuses and $0.7 million of convertible senior and promissory notes. $2.5 million of the $6.3 million liabilities that were settled, were incurred prior to fiscal year 2026. See the paragraph below and Note 5 for additional information regarding the resulting gains or losses recognized from the settlement of these liabilities.
The Company recorded the difference between the fair value of the Series A Non-Voting Convertible Preferred Stock issued and the carrying amount of the liabilities settled in the financial statement line item in which the related cost was originally recorded. As a result, during the three and nine months ended September 30, 2026, the Company recognized a $2.0 million loss in general and administrative expenses, approximately $0.1 million loss in research and development expenses, $0.7 million loss in financing costs and a $0.4 million loss on extinguishment of debt resulting in incremental expense of approximately $3.2 million. See Note 5 for additional information regarding the loss on extinguishment of debt from the settlement of the convertible senior and promissory note liabilities.
The Company’s shares of Series A Non-Voting Convertible Preferred Stock are not subject to a lock-up period but are subject to registration on a future Form S-1. There were no shares of Series A Non-Voting Convertible Preferred Stock issued and outstanding at December 31, 2025.
The Company estimated the fair value of the Series A Non-Voting Convertible Preferred Stock issued during the three and nine months ended September 30, 2026, under a PWERM. The significant assumptions used in determining the fair value of the Series A Non-Voting Convertible Preferred Stock issued during the three and nine months ended September 30, 2026 were as follows:
Changes in these assumptions could materially affect the estimated fair value of the Series A Non-Voting Convertible Preferred Stock.
The significant features of the Company’s Series A Non-Voting Convertible Preferred Stock as of September 30, 2026 are as follows:
Voting Rights – The holders generally have no voting rights, except that holders of a majority of the outstanding shares are entitled to approve certain actions that would adversely affect the rights, preferences or privileges of the Series A Non-Voting Convertible Preferred Stock, including certain amendments to the Company’s governing documents, issuances of additional shares of Series A Non-Voting Convertible Preferred Stock and certain change-of-control transactions prior to conversion.
Dividend Rights – Holders are entitled to receive dividends on an as-converted-to-common-stock basis in the same form and manner as dividends paid on the Company’s common stock, other than dividends payable in common stock.
Liquidation Rights – In the event of a liquidation, dissolution or winding up of the Company, holders are entitled to receive, prior to any distribution to holders of common stock, an amount equal to $0.0001 per share plus any declared but unpaid dividends. After payment of such preference, the Series A Non-Voting Convertible Preferred Stock participates with the common stock on an as-converted basis.
Conversion Rights – Following receipt of the required stockholder approval, the Series A Non-Voting Convertible Preferred Stock automatically converts into common stock on the third business day following such approval, subject to applicable beneficial ownership limitations. Following such approval, holders may also elect to convert their shares of Series A Non-Voting Convertible Preferred Stock into common stock. Each share was initially convertible into 1,000 shares of common stock, subject to adjustment for stock splits and similar events. As a result of the August Reverse Stock Split, the conversion ratio was adjusted to 250 shares of common stock for each share of Series A Non-Voting Convertible Preferred Stock.
Beneficial Ownership Limitation – Conversions are subject to a beneficial ownership limitation established for each holder. The limitation may generally be set between 4.9% and 19.99% of the Company’s outstanding common stock, with a default limitation of 9.9% if no percentage is otherwise designated by the holder.
Redemption Rights – The Series A Non-Voting Convertible Preferred Stock is not redeemable under its Certificate of Designation. However, under the Option Agreement (see Note 7), if stockholder approval of the conversion of the Series A Non-Voting Convertible Preferred Stock has not been obtained within 18 months after the closing date of the G3 acquisition, and the Company fails to deliver the underlying common stock when due, each holder of Option Exercise Consideration may require the Company to redeem those shares for cash at the fair value of the common stock issuable on conversion. The right does not apply to the Initial Consideration or to failures caused by the holder, its broker, or the beneficial ownership limitation. As of September 30, 2026, the Company had not exercised the G3 Call Option, no Option Exercise Consideration had been issued, and shares subject to this redemption right were outstanding.
Common Stock
Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the Board of Directors, subject to prior rights of the preferred stockholders. As of September 30, 2026, dividends have been declared to date.
The Company reserved shares of common stock, as adjusted for the recapitalization and for the Reverse Stock Splits, on an as-converted basis, for future issuance as follows:
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