v3.26.1
Stockholders’ (Deficit) Equity
 3 Months Ended
Mar. 31, 2026
Equity [Abstract]  
Stockholders’ (Deficit) Equity

Note 8 – Stockholders’ (Deficit) Equity

 

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. The Company recorded the change in fair value of this equity payable of $28,171 during the three months ended March 31, 2026. No shares have been purchased as of March 31, 2026.

 

Stock-Based Compensation

 

For the three months ended March 31, 2026 the Company recorded stock-based compensation expense of $55,872 (of which, $0 was included in research and development and $55,872 was included in general and administrative expense) related to options issued to employees and consultants. For the three months ended March 31, 2025 the Company recorded stock-based compensation expense of $72,291 (of which, $15,447 was included in research and development and $56,844 was included in general and administrative expense) related to options issued to employees and consultants. As of March 31, 2026 there was $152,444 of unrecognized stock-based compensation expense, which the Company expects to recognize over a weighted average period of 1.9 years.

 

 

ZYVERSA THERAPEUTICS, INC.

 

Notes to Condensed Consolidated Financial Statements

 

Stock Options

 

A summary of the option activity for the three months ended March 31, 2026 is presented below:

 

           Weighted     
       Weighted   Average     
       Average   Remaining   Aggregate 
   Number of   Exercise   Life   Intrinsic 
   Options   Price   In Years   Value 
                 
Outstanding, January 1, 2026   387,357   $55.67                    
Granted   -    -           
Exercised   -    -           
Expired   (29)   1,760.50           
Outstanding, March 31, 2026   387,328   $55.25    9.2   $- 
                     
Exercisable, March 31, 2026   8,123   $2,583.71    4.9   $- 

 

The following table presents information related to stock options as of March 31, 2026:

 

Options Outstanding   Options Exercisable 
        Weighted     
    Outstanding   Average   Exercisable 
Exercise   Number of   Remaining Life   Number of 
Price   Options   In Years   Options 
$0.59    377,964    -    - 
$152.50    4,157    7.1    2,916 
$738.50    286    6.8    286 
$791.00    38    6.9    38 
$1,760.50    1,031    1.0    1,031 
$3,965.50    37    6.3    37 
$4,053.00    2,095    3.0    2,095 
$5,726.00    1,720    5.2    1,720 
      387,328    4.9    8,123 

 

Stock Warrants

 

On February 27, 2026, in connection with the Securities Purchase Agreements with the Purchasers, the Company issued warrants (“Warrant Liabilities”) to purchase shares of the Company’s common stock, par value $0.0001 per share, with an aggregate fair value of $144,000. The Warrants are exercisable beginning on the six-month anniversary of their issuance, on or after August 26, 2026 (the “Initial Exercise Date”), and expire on the five-year anniversary of the issuance date, on February 27, 2031 (the “Expiration Date”). The exercise price of the Warrant Liabilities is equal to (i) 110% of the price per share paid in a Qualified Offering that occurs by the Initial Exercise Date, or (ii) 110% of the VWAP for the five-trading-day period beginning on the 181st day and ending on the 185th day after the issuance date if a Qualified Offering has not occurred by the Initial Exercise Date. The variable exercise price for the Warrants results in there being no floor for the exercise price if the exercise price is determined in the absence of a Qualified Offering, which creates the potential for an indeterminable number of shares underlying the Warrants. Accordingly, the Company was required to adopt a sequencing policy during the three months ended March 31, 2026 (see Note 3 – Summary of Significant Accounting Policies – Sequencing Policy).

 

The Warrant Liabilities contain standard anti-dilution adjustments, including adjustments for stock dividends, stock splits, and registration right requirements. Further, upon any merger or consolidation, sale of all or substantially all assets, or transaction resulting in acquisition of more than 50% of outstanding voting power (a “Fundamental Transaction”), the Purchasers may elect to (a) exercise the Warrant Liabilities to be settled in the same form of consideration receivable by common stockholders (the “Alternate Consideration”), or (b) require the Company to repurchase the Warrant Liabilities for cash. Either election provides for settlement amounts equal to the Black-Scholes Value which is computed using a Black-Scholes Option Pricing Model with inputs as follows: (A) U.S. Treasury risk-free rate from announcement to the termination date; (B) 100-day historical volatility (Bloomberg HVT, 365-day basis) as of the trading day following announcement; (C) per-share consideration (cash and non-cash) in the Fundamental Transaction; (D) remaining option time from announcement to the termination date; and (E) zero annual rate of dividends. The exercise price used to compute the Black-Scholes Value is equal to the share price in a Fundamental Transaction.

 

 

ZYVERSA THERAPEUTICS, INC.

 

Notes to Condensed Consolidated Financial Statements

 

The Company determined that the Warrants should be classified as liabilities in accordance with ASC 480-10-25-14(a) for instruments that an issuer must or may settle by issuing a variable number of shares and based on a fixed monetary amount known at inception. The Warrants contain certain adjustments to the settlement amount based on an exercise price equal to 110% of the price per share in a Qualified Offering or VWAP that do not meet the criteria for equity treatment. The liability classification under ASC 480 is determinative and did not require further evaluation under ASC 815. As a result, the Warrants were measured at fair value on the date of issuance and changes in fair value are recorded in non-operating other income or losses in the condensed consolidated statements of operations. See Note 3 – Summary of Significant Accounting Policies and Note 9 – Fair Value Measurement for additional details regarding the valuation techniques and assumptions used in valuing Level 3 inputs.

 

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 entered into 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 Common Warrants became exercisable upon stockholder approval on June 11, 2025 for a term of five years and had an exercise price of $1.00 per share. In 2025, all March 2025 Pre-Funded Warrants were exercised. Total cash issuance costs were $290,317, including $199,863 of placement fees, $64,312 of legal fees, and $26,142 of other costs.