Note 8 – Stockholders’ Equity (Deficit)

Equity Incentive Plans

Predecessor 2014 Equity Incentive Plan

On December 12, 2022, in connection with the consummation of the Business Combination, the Predecessor approved the amendment to the 2014 Plan (the “2014 Plan Amendment”). The 2014 Plan Amendment provides, among other things, that upon consummation of the Business Combination, no further increases in the shares of common stock reserved and available for issuance under the 2014 Plan shall occur and no new awards shall be made under the 2014 Plan.

2022 Omnibus Equity Incentive Plan

The Company is authorized to issue awards under the 2022 Omnibus Equity Incentive Plan (the “2022 Plan”), as amended on October 31, 2023 and October 29, 2024. Under the 2022 Plan, 382,122 shares of common stock are authorized for issuance as of December 31, 2025. The number of shares of common stock available for issuance under the 2022 Plan shall automatically increase on the first trading day of January each calendar year during the term of the 2022 Plan, beginning with calendar year 2023, by an amount equal to four percent (4%) of the total number of shares of common stock outstanding on the last trading day in December of the immediately preceding calendar year. The 2022 Plan provides for the issuance of incentive stock options, non-statutory stock options, rights to purchase common stock, stock appreciation rights, restricted stock and restricted stock units to employees, directors and consultants of the Company and its affiliates. The 2022 Plan requires the exercise price of stock options to be not less than the fair value of the Company’s common stock on the date of grant. As of December 31, 2025, there were 377,965 shares available for future issuance under the 2022 Plan.

On January 1, 2026, the total number of shares under the 2022 Omnibus Equity Incentive Plan automatically increased to 705,958.

Common Stock

On February 3, 2025, the Company entered into a marketing agreement with a vendor in which the Company agreed to issue 60,000 shares of common stock in exchange for marketing services. The fair value of the common stock of $81,600 was recognized as expense on a straight-line basis over the two-month term of the contract. The shares were issued on February 3, 2025.

On March 20, 2025, the Company entered into a marketing agreement with a vendor in which the Company agreed to issue 100,000 shares of common stock in exchange for digital marketing services. The fair value of the common stock of $70,100 was recognized as expense on a straight-line basis over the three-month term of the contract. On April 11, 2025, the Company issued the 100,000 shares of common stock to the vendor using the market value of $77,000 on that date. The difference between the original expense amount and the value when the shares were issued was reflected in the change in fair value of equity payable in other (income) expense on the condensed consolidated statements of operations.

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On May 1, 2025, the Company entered into a marketing agreement with a vendor in which the Company agreed to issue 100,000 shares of common stock in exchange for marketing services. The fair value of the common stock of $51,800 was recognized as expense on a straight-line basis of the expense over the two-month term of the contract. On May 13, 2025, the Company issued the 100,000 shares of common stock to the vendor using the market value of $51,800 on that date.

On August 1, 2025, the Company entered into a marketing agreement with a vendor in which the Company agreed to issue 160,000 shares of common stock in exchange for marketing services. The fair value of the common stock of $29,600 was recognized as expense on a straight-line basis over the two-month term of the contract.

Equity Purchase Agreement

On June 24, 2025, the Company entered into an Equity Purchase Agreement (the “Purchase Agreement”) with Williamsburg Venture Holdings, LLC (the “Purchaser”), whereby the Company has the right, but not the obligation, to sell to the Purchaser, and the Purchaser is obligated to purchase, up to an aggregate of $10.0 million of shares (the “ELOC Shares”) of the Company’s common stock. The term of the Purchase Agreement is the earlier of June 24, 2027, or the date on which the Purchaser has purchased ELOC Shares for an aggregate purchase price of $10.0 million. The Company has also agreed to issue to the Purchaser 426,829 shares common stock (“Commitment Shares”), which will be issued on a pro rata basis as the Company draws down ELOC shares, with any remaining shares to be issued upon termination. The fair value of the Commitment Shares on the date of the Purchase Agreement of $265,957 was established as accrued issuable equity and was expensed, along with approximately $74,000 of additional issuance costs. No shares have been purchased as of December 31, 2025.

Stock-Based Compensation

For the year ended December 31, 2025, the Company recorded stock-based compensation expense of $222,831 (of which, $10,345 was included in research and development and $212,486 was included in general and administrative expense) related to options issued to employees and consultants. As of December 31, 2025, there was $208,316 of unrecognized stock-based compensation expense, which the Company expects to recognize over a weighted average period of 1.9 years.

For the year ended December 31, 2024, the Company recorded stock-based compensation expense of $705,567 (of which, $61,789 was included in research and development and $643,778 was included in general and administrative expense) related to options issued to employees and consultants. As of December 31, 2024, there was $321,893 of unrecognized stock-based compensation expense, which the Company expects to recognize over a weighted average period of 1.3 years.

Stock Options

On July 11, 2025, the Company granted ten-year stock options to purchase 377,964 shares of common stock to employees and directors of the Company under the 2022 Plan. The stock options had an aggregate grant date value of $201,296, vest annually over three years and have an exercise price of $0.59 per share.

The grant date fair value of stock options granted during the years ended December 31, 2025 and 2024 was determined using the Black Scholes method, with the following assumptions used:

 Schedule of Stock Options Granted

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the option activity for the year ended December 31, 2025 is presented below:

 Schedule of Stock Option Activity

The following table presents information related to stock options as of December 31, 2025:

 Schedule of Information Related to Stock Options

Stock Warrants

On March 7, 2025, the Company closed on a private placement (the “Private Placement”) with an institutional investor, pursuant to which the Company sold pre-funded warrants (the “March 2025 Pre-Funded Warrants”) to purchase 2,105,265 shares of common stock and Series A-3 common warrants (the “March 2025 Common Warrants”) to purchase 2,105,265 shares of common stock at a combined purchase price of $0.9499 which resulted in gross proceeds of approximately $2.0 million. In addition, the Company and the investor executed an amendment to certain November 5, 2024 common share purchase warrants to reduce the exercise price of certain outstanding warrants to purchase 957,200 shares of common stock from $2.06 per share to $1.00 per share. The $53,890 incremental fair value of the modified warrants as compared to the original warrants was recognized as an additional issuance cost of the Private Placement. The March 2025 Pre-Funded Warrants are exercisable immediately, may be exercised at any time until all March 2025 Pre-Funded Warrants are exercised in full, and have an exercise price of $0.0001 per share. As of December 31, 2025, all March 2025 Pre-Funded Warrants were exercised. The March 2025 Common Warrants became exercisable upon Stockholder Approval on June 11, 2025 for a term of five years and have an exercise price of $1.00 per share. Total cash issuance costs were $290,317 including $199,863 of placement fees, $64,312 of legal fees, and $26,142 of other costs.

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Warrant Inducement Offer

On July 8, 2025, the Company entered into a warrant exercise inducement offer letter agreement (the “Inducement Letter”) with a holder (the “Holder”) of (i) outstanding Series A-2 common stock purchase warrants, as amended (the “Series A-2 Warrants”), exercisable for up to an aggregate of 957,200 shares of the Company’s common stock, and (ii) Series A-3 common stock purchase warrants (the “Series A-3 Warrants” and together with the Series A-2 Warrants, the “Existing Warrants”) exercisable for up to an aggregate of 2,105,265 shares of common stock, which warrants were originally issued by the Company on November 5, 2024 and March 5, 2025, respectively. The Existing Warrants had an exercise price of $1.00 per share.

The Holder agreed to exercise the Existing Warrants for cash at a reduced exercise price of $0.67 per share in consideration of the Company’s agreement to issue the Holder new warrants to purchase up to a number of shares of common stock equal to 200% of the number of shares of common stock issued pursuant to the Holder’s exercise of Existing Warrants, comprised of new Series A-4 warrants to purchase up to 6,124,930 shares of common stock (the “Inducement Warrants”) at an exercise price of $0.67 per share with an exercise term of 5 years from the initial exercise date. The Company received $2,051,852 in cash proceeds and incurred $175,222 in transaction costs consisting of $133,370 cash fee paid to its financial advisor and $41,852 in other fees. As a result of the reduction in exercise price of the Existing Warrants, the Company recognized a non-cash warrant modification charge of $1,762,756. Because the modification represented a short-term inducement, modification accounting was only performed on the warrants that were actually exercised under the program. The Company recognized the $1,762,756 modification-date incremental value of the modified Existing Warrants and Inducement Warrants issued as compared to the original Existing Warrants, as an issuance cost of the warrant exercise, which was classified as equity with no impact on the consolidated statements of operations. The initial exercise date of the Inducement Warrants is the date that the Company’s stockholders approve the issuance of shares of common stock underlying the warrants (the “Inducement Warrants Shares”) pursuant to the applicable rules and regulations of The Nasdaq Stock Market LLC (“Nasdaq”). On October 6, 2025, Nasdaq filed with the SEC a Form 25, removing and delisting the Company’s securities from Nasdaq. Based on the foregoing and because applicable rules and regulations of the OTC Markets Group Inc. do not require stockholder approval for the issuance of the Inducement Warrant Shares, the Company noted that stockholder approval is no longer required.

The modification date fair value of stock warrants modified during the years ended December 31, 2025 and 2024 was determined using the Black Scholes method, with the following assumptions used:

 Schedule of Issuance Date Fair Value of Stock Warrants

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A summary of the warrant activity for the year ended December 31, 2025 is presented below:

 Summary of Warrant Activity

The following table presents information related to stock warrants as of December 31, 2025:

 Schedule of Information Related to Stock Warrants

ZYVERSA THERAPEUTICS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS