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Stockholders’ equity
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
Stockholders’ equity

Note 7. Stockholders’ equity

 

Capital stock

 

The Company has the authority to issue 400,000,000 shares of capital stock, consisting of 300,000,000 shares of Common Stock and 100,000,000 shares of undesignated preferred stock, whose rights and privileges will be defined by the Board of Directors when a series of preferred stock is designated.

 

Common Stock

 

2024

 

On February 13, 2024, the Company closed its initial public offering consisting of 1,000,000 shares at a price of $7.00 per share for approximately $7.0 million in gross proceeds. After deducting the underwriting commission and other offering expenses totaling $1.2 million, the net proceeds to the Company were $5.8 million (the “IPO”).

 

On December 9, 2024, Starwood Trust, a related party, entered into a stock purchase agreement with the Company to purchase 142,857 shares of unregistered common stock at $7 a share for a total of $1.0 million in proceeds to the Company.

 

During the year ended December 31, 2024, deferred offering costs from December 31, 2023 of $303,281 and offering costs of $863,744 incurred in 2024 were charged against additional paid in capital.

 

2025

 

On February 14, 2025, the Company filed a shelf registration statement with the SEC to facilitate the issuance of our common stock and entered into an At The Market Offering Agreement (the “ATM Agreement”) with Rodman & Renshaw LLC under which the Company may offer and sell shares of its Common Stock, with an aggregate offering amount to be sold of up to $100,000,000. During the year ended December 31, 2025, the Company sold a total of 3,218,300 shares of its common stock, at a weighted average price of $2.12 for total proceeds of $6,553,209, net of costs of $72,092.

 

On May 19, 2025, the Company entered into an agreement to raise $3 million in equity financing through a direct investment by The Bayshore Trust, an entity affiliated with the Company’s largest shareholder. The transaction was structured as a straight restricted common stock deal with no warrants. The Company issued 333,334 restricted shares of its common stock, no par value at a purchase price of $3.00 per share, representing an 18% premium to the closing share price of the Common Stock of $2.54 on the date of execution (the “Bayshore Financing”). The Company received the initial payment of $1 million for the Bayshore Financing on May 20, 2025. In July 2025, an additional $2 million was received, for the issuance of 666,667 shares.

 

On May 27, 2025, 400,000 fully vested common shares were granted for services to the Company’s CEO. The restricted shares were valued at $840,000 based on the stock quoted trading price at the grant date and were expensed immediately as compensation expense.

 

Warrants

 

In connection with various transactions and the IPO summarized below, the Company issue stock warrants. Warrant activity for the years ended December 31, 2025 and 2024 is summarized below:

 

       Weighted Average     
   Number of       Remaining Contractual   Aggregate Intrinsic 
   Warrants   Exercise Price   Term (Years)   Value 
Outstanding as of December  31, 2023   2,774,057   $4.85    4.5(1)   - 
Granted   50,000    7.00    3.2    - 
Exercised   (10,000)   3.73              
Outstanding as December 31, 2024   2,814,057    4.97    3.49(2)   - 
Granted   -                
Exercised   -                
Outstanding as of December 31, 2025   2,814,057    4.97    2.45(2)   - 

 

(1) The warrants herein consist of various contractual terms. The warrants herein consist of 2,439,025 warrants issued to Bay Shore Trust that have a remaining contractual term of 2.5 years as of December 31, 2025, and 335,032 warrants issued to investors associated with the 2023 Private Placement that currently have an indeterminable contractual term. See disclosures below for more information on these warrants
   
(2) The warrants herein consist of various contractual terms. The warrants herein consist of 2,429,025 warrants issued to Bay Shore Trust that have a remaining contractual term of 2.5 years as of December 31, 2025; 335,032 warrants issued to investors associated with the 2023 Private Placement that currently have an indeterminable contractual term, and 50,000 warrants issued to underwriters as part of the IPO with a remaining contractual life of 3.2 years. See disclosures below for more information on these warrants

 

 

Private placement Warrants

 

During the year ended December 31, 2023, the Company issued to the 2023 Private Placement investors a Common Stock warrant the right to purchase up to 268,025 shares of common stock at an exercise price of $15.42 per share. The Company also issued to the placement agent a Common Stock warrant the right to purchase up to 67,007 shares of common stock at an exercise price of $3.73 per share. Both issuances of warrants are immediately vested and will be exercisable any time until the day that is one year plus ninety days from the date an Investigational New Drug, or IND, filing is made with the FDA.

 

Bay Shore Trust Warrants

 

In consideration of the line of credit provided by the Bay Shore Trust, the Company issued to the Bay Shore Trust a common stock purchase warrant on June 15, 2023 giving the Bay Shore Trust the right to purchase up to 2,439,025 shares of common stock at an exercise price of $3.73 per share. This warrant will expire five years after the date of grant.. The fair value of the warrants were estimated on the grant date using the Black-Scholes valuation model and level 3 inputs based on assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate, which resulted in $5.95 million of deferred financing costs. In 2023 this cost was recorded as deferred financing costs and additional paid in capital on the balance sheet and was amortized straight-line over the term of the line of credit (which is 24 months). Associated amortization of deferred finance costs was recorded to interest expense on the statement of operations. The line of credit expired upon the IPO occurring in February 2024, and as such the remaining deferred financing costs associated with the warrant was fully amortized to interest expense in 2024. As of December 31, 2024, the warrant is fully amortized (see Note 4).

 

On November 22, 2024, Bay Shore Trust transferred 100,000 warrants to an unaffiliated party as part of a gift transfer.

 

In December 2024, 10,000 Common Stock warrants were exercised at an exercise price of $3.73 per share and the Company issued 10,000 shares of Common Stock upon such exercise in exchange for $37,300 delivered to the Company.

 

Underwriter warrants

 

In connection with the IPO in February 2024, the Company issued 50,000 warrants to purchase Common Stock to the IPO underwriter (or its designees) at an exercise price of $7.00 which are exercisable immediately and expire in the four-and-a-half-year period commencing six months after the commencement of sales in the IPO. The warrants provide for registration rights (including a one-time demand registration right and piggyback registration rights that expire 5 years from the commencement of sales of the offering) and customary anti-dilution provisions as permitted under FINRA Rule 5110(g)(8). The fair value of the warrants were estimated on the grant date using the Black-Scholes valuation model and level 3 inputs based on assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate, which resulted in $0.2 million of equity issuance costs. The warrants were considered equity issuance costs and therefore there was no financial statement impact during the year ended December 31, 2024.

 

Key assumptions used to value underwriter warrants in February 2024 are as follows:

 

Expected price volatility   84.78%
Risk-free interest rate   4.14%
Fair Market Value of underlying Common Stock  $7.01 
Expected term in years   5 years 
Dividend yield   - 

 

2023 Omnibus Incentive Plan

 

In December 2023, the Company’s Board of Directors adopted the Company’s 2023 Omnibus Incentive Plan, (“2023 Plan”). The 2023 Plan authorizes the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code, to the Company’s employees and any of its parent and subsidiary corporations’ employees, and for the grant of nonstatutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to the Company’s employees, directors, and consultants and any of its future subsidiary corporations’ employees and consultants

 

The 2023 Plan provides that 6,500,000 shares of the Company’s Common Stock are reserved for issuance under the 2023 Plan, all of which may be issued pursuant to the exercise of incentive stock options.

 

 

Stock-based compensation

 

Stock options

 

The vesting period for stock options granted is generally immediately to one year. All stock options granted under the 2023 Plan have a maximum contractual term of ten years.

 

The grant-date fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model that uses assumptions for expected volatility, expected dividends, expected term, and the risk-free interest rate. In 2024 expected price volatility is based on the historical volatilities of a peer group as the Company does not have a multi-year trading history for its shares. Industry peers consist of several public companies in the biotech industry similar to the Company in size, stage of life cycle and product indications. Starting in 2025 expected price volatility is based solely on the Company’s trading history for its common stock.

 

Expected term of options granted is derived using the “simplified method” which computes expected term as the average of the sum of the vesting term plus contract term. The risk-free rate is based on the 5-year U.S. Treasury yield curve in effect at the time of grant. The Company recognizes forfeitures as they occur.

 

The weighted average assumptions for grants are provided in the following table:

 

   Year ended December 31, 
   2025   2024 
Expected volatility   92.5 - 139.0%   88.8 - 90.4%
Expected term (years)   5.0 - 5.4    5.1 - 5.6 
Expected dividend yield   0%   0%
Risk-free interest rate   4.1 - 4.2%   3.7%

 

During the year ended December 31, 2025, the Company issued stock options under the 2023 Plan as follows:

 

Date  Number of stock options   Exercise Price   Vesting period
May 13   50,000   $2.75   one year
May 27   2,000,000   $2.10   immediate
October 15   37,500   $1.73   one year

 

A summary of the Company’s stock option activity is as follows: 

 

       Weighted Average     
   Number of
stock options		   Exercise price   Remaining
contractual life
(years)		   Aggregate
intrinsic value		 
Balance at December 31, 2024   2,352,670   $5.02    9.6   $     - 
Granted   2,087,500   $2.11           
Expired   (72,500)  $5.02           
Forfeited   (180,000)  $5.02           
Balance at December 31, 2025   4,187,670   $3.57    9.0   $- 
                     
Vested and exercisable at December 31, 2025   4,125,170   $3.60    9.0   $- 
Vested and expected to vest at December 31, 2025   4,187,670   $2.14    9.6   $- 

 

The Company recognized approximately $5.3 million and $6.9 million in stock-based compensation in 2025 and 2024, respectively. The weighted average grant-date fair values of options granted during the years ended December 31, 2025 and 2024 were $1.84 and $3.80 per share, respectively. The grant date fair value of shares vested during the years ended December 31, 2025 and 2024 was $11.8 million and $4.0 million, respectively. As of December 31, 2025, there is $83,600 of unrecognized compensation cost related to unvested stock options granted under the Company’s 2023 Plan that is expected to be recognized over the next year.

 

 

Restricted Stock Units (RSUs)

 

In 2025 the Chairman and CEO was issued RSUs for 400,000 common shares which were fully vested upon grant. These RSUs were valued at $840,000 based on the stock quoted trading price at the grant date and were expensed immediately as compensation expense.