Jaguar Health declares convertible preferred dividend
Royalty payments and the 2021 Note maturity move to January 1, 2027, while Series R shares are scheduled to convert on November 2, 2026.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Filing Summary
Jaguar Health, Inc. declared a special dividend of one Series R Convertible Preferred share per common share held at the close of business October 13, 2026, and per share issuable under eligible warrants covering up to 142,535 common shares. Payment is scheduled for October 15, 2026. Each Series R share converts automatically on November 2, 2026 into five common shares, subject to a 19.99% beneficial-ownership cap; the aggregate conversion-share limit is 11,625,000, subject to adjustments.
Monthly payments under each $12 million original-principal royalty interest with Uptown Capital and Streeterville Capital are scheduled to begin January 1, 2027, instead of October 1, 2026; each payment is the greater of $750,000.00 or the royalty amount due under its agreement. The maturity of the 2021 secured note, originally $6,220,812.50, was extended from October 1, 2026 to January 1, 2027.
Jaguar warns conversion may significantly dilute holders not entitled to the dividend, depress the common-stock price and make additional equity financing more difficult. Conversion shares that would breach a holder’s 19.99% beneficial-ownership cap are held in abeyance. C/M Capital consented to the dividend and Series R authorization; Jaguar agreed to repurchase all Series P shares then held by C/M Capital for cash at the applicable liquidation amount upon a Fundamental Transaction, subject to legally available funds and required approvals.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- None.
Negative
- Major point. Forward-looking: it has not happened yet and may not happen.Jaguar identifies significant dilution risk from a conversion-share limit of 11,625,000 common shares.
Filing Explained
Under the risk-factor exhibit’s illustration for the scheduled Series R conversion, conversion shares would represent about
8-K Event Classification
Key Figures
Key Terms
Conversion Ratio financial
Maximum Percentage financial
Deemed Liquidation Event financial
Liquidation Preference financial
Royalty Payment financial
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How does Jaguar Health’s JAGX Series R dividend work?
Do JAGX eligible warrant holders automatically receive the Series R dividend?
What limits Jaguar Health’s JAGX Series R conversion?
AI-generated analysis. How Rhea-AI works. Not financial advice.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
Royalty Interest Global Amendments
On September 30, 2026, Jaguar Health, Inc. (the “Company”) entered into an amendment (the “Uptown 2020 Royalty Interest Global Amendment No. 6”) to the royalty interest in the original principal amount of $12 million, as amended (the “Uptown 2020 Royalty Interest”) with Uptown Capital, LLC (f/k/a Irving Park Capital, LLC; “Uptown”), pursuant to which Section 2.2 of the Uptown 2020 Royalty Interest was deleted and replaced in its entirety such that the initiation of monthly payments shall be extended from October 1, 2026 to January 1, 2027, and the monthly Royalty Payment shall be the greater of (a) $750,000.00, and (b) the actual Royalty Payment amount Uptown is entitled to for such month pursuant to Section 2.1 of the Uptown 2020 Royalty Interest.
On September 30, 2026, the Company also entered into an amendment (the “Streeterville 2022 Royalty Interest Global Amendment No. 6”) to the royalty interest in the original principal amount of $12 million dated August 24, 2022, as amended (the “Streeterville 2022 Royalty Interest”) with Streeterville Capital, LLC (“Streeterville”), pursuant to which Section 2.2 of the Streeterville 2022 Royalty Interest was deleted and replaced in its entirety such that the initiation of monthly payments shall be extended from October 1, 2026 to January 1, 2027, and the monthly Royalty Payment shall be the greater of (a) $750,000.00, and (b) the actual Royalty Payment amount Streeterville is entitled to for such month pursuant to Section 2.1 of the Streeterville 2022 Royalty Interest.
The foregoing descriptions of the Uptown 2020 Royalty Interest Global Amendment No. 6 and Streeterville 2022 Royalty Interest Global Amendment No. 6 do not purport to be complete and are qualified in their respective entirety by reference to the Uptown 2020 Royalty Interest Global Amendment No. 6 and Streeterville 2022 Royalty Interest Global Amendment No. 6, copies of which are filed herewith as Exhibits 4.1 and 4.2, respectively, and incorporated herein by reference.
Note Amendment
On September 30, 2026, the Company and Napo Pharmaceuticals, Inc., the Company’s wholly-owned subsidiary (“Napo” and together with the Company, the “Borrower”), entered into an amendment (the “2021 Note Amendment”) with Streeterville to the secured promissory note in the original principal amount of $6,220,812.50 (as amended, the “2021 Note”) issued by Borrower to Streeterville on January 19, 2021 pursuant to that certain Note Purchase Agreement among the same parties dated as of the even date. Pursuant to the 2021 Note Amendment, the maturity date of the 2021 Note is extended from October 1, 2026 to January 1, 2027.
The foregoing description of the 2021 Note Amendment does not purport to be complete and is qualified in its entirety by reference to the 2021 Note Amendment, a copy of which is filed herewith as Exhibit 4.3 and incorporated herein by reference.
Series P Preferred Stockholder Consent
As previously disclosed, on June 9, 2026, the Company entered into securities purchase agreements (collectively, the “Series P Preferred Stock Purchase Agreements”) with C/M Capital Master Fund, LP and one of is affiliates (collectively, “C/M Capital”), pursuant to which the Company issued and sold to C/M Capital in a private placement an aggregate of 240 shares of Series P Non-Convertible Preferred Stock, par value $0.0001 per share, of the Company (“Series P Preferred Stock”).
On October 2, 2026, the Company and C/M Capital entered into a consent and waiver (the “Consent and Wavier”) pursuant to the terms of the Series P Preferred Stock Purchase Agreements and the Certificate of Designation of Preferences, Rights and Limitations of Series P Non-Convertible Preferred Stock (the “Series P Certificate of Designation”), under which Consent and Waiver, C/M Capital consented to the Preferred Stock Dividend (as defined below) and the authorization of Series R Preferred Stock (as defined below).
Pursuant to the Consent and Waiver, as consideration for C/M Capital to grant the consents and waivers thereunder, the Company agreed, upon the Company’s entry into any Fundamental Transaction (as defined in the Series P Certificate of Designation), to repurchase all of the then outstanding shares of Series P Preferred Stock held by C/M Capital with cash, to the extent of the funds legally available to the Company, at a price per share of Series P Preferred Stock equal to the applicable Liquidation Amount (as defined in the Series P Certificate of Designation) (the “Repurchase of Series P Preferred Stock”), subject to any approvals and consents that will be necessary to complete the Repurchase of Series P Preferred Stock.
The foregoing description of the Consent and Wavier does not purport to be complete and is qualified in its entirety by reference to the Consent and Wavier, a copy of which is filed herewith as Exhibit 10.1 and incorporated herein by reference.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information contained above in Item 1.01 is hereby incorporated by reference into this Item 2.03 in its entirety.
| Item 3.03 | Material Modification to Rights of Security Holders |
The information set forth in Item 8.01 of this Current Report on Form 8-K is incorporated into this Item 3.03 by reference.
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| Item 5.03 | Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year. |
Series R Certificate of Designation
In connection with the Preferred Stock Dividend, on October 2, 2026, the Company filed a Certificate of Designation of Preferences, Rights and Limitations of Series R Convertible Preferred Stock (the “Certificate of Designation”) with the Secretary of State of the State of Delaware, to designate 2,325,000 shares of the Company’s preferred stock, par value $0.0001 per share, as Series R Convertible Preferred Stock (the “Series R Preferred Stock”).
No Issuance in Fraction
No fractional shares of Series R Preferred Stock or scrip representing fractional shares of Series R Preferred Stock shall be issued. In lieu of any fractional shares to which a Holder (as defined below) would otherwise be entitled to receive, the Company shall round up to the nearest whole share of Series R Preferred Stock. No cash, property, or other consideration shall be paid or delivered by the Company in lieu of any fractional shares.
Transferability
Shares of Series R Preferred Stock will initially be issued in book-entry form through The Depository Trust Company (“DTC”), and may be transferred, assigned or pledged by any Holder without the prior written consent of the Company.
Dividends
Holders of shares of Series R Preferred Stock (the “Holders”) will not be entitled to receive any dividends on shares of Series R Preferred Stock.
Voting Rights
Except as otherwise provided in the Certificate of Designation or as otherwise required by law, the Series R Preferred Stock shall have no voting rights. For any matter in which the Holders are entitled to vote, such Holders shall be entitled to one vote per one share of Series R Preferred Stock.
Liquidation Rights
In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, following payment in full of the liquidation preference payable out of the assets of the Company to any series of Senior Preferred Stock (as defined below) and before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of Common Stock, and subject to the rights of the Company’s depositors or other creditors, each Holder shall be entitled to receive, in respect of each share of Series R Preferred Stock held by such Holder, an amount equal to $0.0001 (the “Liquidation Preference”). After payment in full of the Liquidation Preference to the Holders, the remaining assets of the Company available for distribution to stockholders shall be distributed among the Holders and the holders of Common Stock and the holders of any other class or series of stock of the Company entitled to participate in the distribution of the residual assets of the Company, with each share of Series R Preferred Stock participating on an as-converted basis.
“Senior Preferred Stock” means the Series P Preferred Stock, the Series Q Perpetual Preferred Stock (“Series Q Preferred Stock”) and any other series of preferred stock issued by the Company that, by its terms, ranks senior to the rights of the Series R Preferred Stock with respect to the distribution of assets upon any voluntary or involuntary liquidation, dissolution or winding up of the Company.
In the event of any Deemed Liquidation Event (as defined below), each share of Series R Preferred Stock shall be entitled to receive, in respect of each share of Series R Preferred Stock held by such Holder, the cash, securities, property or other consideration, if any, that such Holder would have been entitled to receive in such Deemed Liquidation Event had such share of Series R Preferred Stock been converted into the applicable number of shares of Common Stock immediately prior to the consummation of such Deemed Liquidation Event, subject to the Maximum Percentage (as defined below) limitation on the Conversion (as defined below).
With respect to any voluntary or involuntary liquidation, dissolution or winding up of the Company or Deemed Liquidation Event, the Series R Preferred Stock shall rank junior to the Senior Preferred Stock. Nothing in the Certificate of Designation shall be construed to grant the Series R Preferred Stock any right to receive any distribution or payment out of the assets of the Company before the full payment or satisfaction of all amounts then payable to the holders of the Senior Preferred Stock under their respective certificates of designation.
Each of the following events shall be considered a “Deemed Liquidation Event”: (A) a merger or consolidation in which the Company is a constituent party and in which the stockholders of the Company immediately prior to such merger or consolidation do not continue to hold a majority of the voting power of the Company or any successor entity following such merger or consolidation; or (B) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger, consolidation or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries, except where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the Company.
Conversion Rights
On November 2, 2026 (the “Conversion Date”), each outstanding share of Series R Preferred Stock will automatically convert into such whole number of fully paid and non-assessable shares of Common Stock (the
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“Conversion Shares”) at the Conversion Ratio (as defined below) (the “Conversion”); provided, however, that in no event may Conversion Shares be issued to any Holder that would cause such Holder, together with its affiliates, to beneficially own shares of Common Stock in excess of the Maximum Percentage immediately after giving effect to the issuance of the Conversion Shares.
For each share of Series R Preferred Stock, the Conversion Ratio shall be five shares of Common Stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the original issue date of Series R Preferred Stock.
For any issuance of Conversion Shares that would cause a breach of the Maximum Percentage limitation, the Company shall hold such Conversion Shares in abeyance for the benefit of the Holder until such time, if ever, as the Holder’s right to receive such Conversion Shares would not cause the Holder, together with its affiliates, to beneficially own shares of Common Stock in excess of the Maximum Percentage immediately after receiving such Conversion Shares.
No fractional shares or scrip representing fractional shares shall be issued upon the conversion of the Series R Preferred Stock. In lieu of any fractional Conversion Shares to which a Holder would otherwise be entitled to receive upon such conversion, the Company shall round up to the nearest whole share of Common Stock. No cash, property, or other consideration shall be paid or delivered by the Company in lieu of any fractional shares.
Maximum Percentage
In no event may shares of Common Stock be issued to any Holder that would cause such Holder’s beneficial ownership to exceed the Maximum Percentage, which is 19.99% of the number of shares of Common Stock outstanding on a given date (including for such purpose the shares of Common Stock issuable upon such issuance).
Share Reserve; Maximum Shares
The Company shall reserve and keep available at all times, free of preemptive and other similar rights of stockholders, sufficient shares of authorized but unissued shares of Common Stock for the issuance of the maximum number of the Conversion Shares issuable upon conversion of all of then outstanding shares of Series R Preferred Stock. The aggregate number of Conversion Shares issuable upon conversion of the Series R Preferred Stock shall not exceed 11,625,000 shares of Common Stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the original issue date of Series R Preferred Stock.
Trading Market
There is no established trading market for any of the Series R Preferred Stock, and we do not expect a market to develop. We do not intend to apply for a listing for any of the Series R Preferred Stock on any securities exchange or other nationally recognized trading system. The Series R Preferred Stock will not trade with the Common Stock. The CUSIP number for the Series R Preferred Stock will be 47010C847.
The foregoing description of the Certificate of Designation does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation, a copy of which is filed as Exhibit 3.1 to this Current Report and is incorporated by reference herein.
| Item 7.01 | Regulation FD Disclosure |
On October 2, 2026, the Company issued a press release announcing the special one-time Preferred Stock Dividend. A copy of the press release is attached hereto as Exhibit 99.1.
The information in this Item 7.01 disclosure is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or otherwise subject to the liabilities under that Section. In addition, the information in this Item 7.01 disclosure shall not be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended, or the Securities Act, except as shall be expressly set forth by specific reference in such filing.
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| Item 8.01 | Other Events |
On October 2, 2026, the Company announced that its board of directors (the “Board”) declared a special one-time dividend of one share of Series R Preferred Stock for each one share of Common Stock outstanding, plus each one share issuable upon exercise of certain warrants and pre-funded warrants to purchase, in aggregate, up to 142,535 shares of our Common Stock with dividend rights (the “Eligible Warrants”) outstanding, at the close of business on October 13, 2026 (the “Record Date”) (the “Preferred Stock Dividend”). The Preferred Stock Dividend is expected to be paid as of the close of business on October 15, 2026. The ex-dividend date will be announced as soon as it is determined by the Nasdaq Stock Market. Investors who trade during this period should consult with their broker with respect to the entitlement to the Preferred Stock Dividend.
The Company is also supplementing the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, Quarterly Reports on Form 10-Q for the quarters ended March 31, 2026 and June 30, 2026, and other filings made with the SEC, with the risk factors relating to the Preferred Stock Dividend, filed as Exhibit 99.2 hereto and incorporated by reference herein.
| Item 9.01 | Financial Statements and Exhibits. |
| Exhibit Number |
Exhibit Description | |
| 3.1 | Certificate of Designation of Preferences, Rights and Limitations of Series R Convertible Preferred Stock. | |
| 4.1 | Global Amendment No. 6, dated September 30, 2026, by and between Jaguar Health, Inc. and Uptown Capital, LLC. | |
| 4.2 | Global Amendment No. 6, dated September 30, 2026, by and between Jaguar Health, Inc. and Streeterville Capital, LLC. | |
| 4.3 | Amendment to the 2021 Note, dated September 30, 2026, by and among Jaguar Health, Inc., Napo Pharmaceuticals, Inc. and Streeterville Capital, LLC. | |
| 10.1 | Consent and Wavier, dated October 2, 2026, by and among Jaguar Health, Inc., C/M Capital Master Fund, LP and WVP Emerging Manager Onshore Fund, LLC | |
| 99.1 | Press Release, dated October 2, 2026, related to the special dividend of Series R Preferred Stock. | |
| 99.2 | Supplemental Risk Factors. | |
| 104 | Cover Page Interactive Data File - The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| JAGUAR HEALTH, INC. | ||||||
| Date: October 5, 2026 | By: | /s/ Lisa A. Conte | ||||
| Lisa A. Conte | ||||||
| Chief Executive Officer & President | ||||||
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Exhibit 99.1
Jaguar Health Announces a Special Stock Dividend
Dividend intended to provide dilution protection to Jaguar shareholders as company continues evaluation of strategic alternatives
SAN FRANCISCO, CA / October 2, 2026 / Jaguar Health, Inc. (NASDAQ: JAGX) (“Jaguar” or “the Company”) today announced that its Board of Directors has declared a special stock dividend (the “Special Stock Dividend”) to holders of Jaguar Common Stock and certain outstanding warrants as of record on October 13, 2026. The Special Stock Dividend will consist of the Company’s Series R Convertible Preferred Stock (the “Preferred Stock”). The CUSIP number for the Preferred Stock is 47010C847.
Only persons who own shares of the Company’s voting common stock (the “Common Stock”), or certain warrants to purchase Common Stock with dividend rights (the “Warrants”) at the close of business on October 13, 2026 (the “Record Date”) will be entitled to receive shares of the Preferred Stock. Each share of Preferred Stock will convert into five shares of Common Stock on November 2, 2026 (the “Conversion Date”).
“Jaguar is issuing the Special Stock Dividend to reward and recognize our passionate and supportive stockholders and provide protection against potential dilution as we continue evaluation of strategic alternatives,” said Lisa Conte, Jaguar’s founder, president, and CEO. “We remain sharply focused on our ongoing global development program for oral crofelemer as adjunctive therapy to parenteral support for rare intestinal failure diseases, including microvillus inclusion disease (MVID) and short bowel syndrome with intestinal failure (SBS-IF) for crofelemer powder for oral solution. Jaguar’s intestinal failure program is expected to continue to provide clinical milestones, including a planned New Drug Application (NDA) filing for crofelemer for MVID in mid-2027.”
The payment date for the Special Stock Dividend is October 15, 2026, two days after the Record Date.
For additional information about the Special Stock Dividend and terms of the Preferred Stock and associated risk factors, please refer to the Form 8-K the Company plans to file with the U.S. Securities and Exchange Commission, which will be viewable on the Company’s website.
About Crofelemer
Crofelemer is a novel, oral plant-based prescription medicine purified from the red bark sap, also referred to as “dragon’s blood,” of the Croton lechleri tree in the Amazon Rainforest. Napo Pharmaceuticals has established a sustainable harvesting program, under fair trade practices, for crofelemer to ensure a high degree of quality, ecological integrity, and support for indigenous communities.
About the Jaguar Health Family of Companies
Jaguar Health, Inc. (Jaguar) is a commercial stage pharmaceuticals company focused on developing novel proprietary prescription medicines sustainably derived from plants from rainforest areas for people and animals with gastrointestinal distress. Jaguar family companies Napo Pharmaceuticals, Inc. (Napo) and Napo Therapeutics S.p.A. focus on the development and commercialization of novel crofelemer powder for oral solution for the treatment of rare and orphan gastrointestinal disorders with intestinal failure, including microvillus inclusion disease and short bowel syndrome.
For more information about:
Jaguar Health, visit https://jaguar.health
Napo Pharmaceuticals, visit napopharma.com
Napo Therapeutics, visit napotherapeutics.com
Forward-Looking Statements
Certain statements in this press release constitute “forward-looking statements.” These include statements regarding payment of dividends, conversion of the Preferred Stock, Jaguar’s expectation that its intestinal failure program will continue to provide clinical proof-of-concept milestones, Jaguar’s expectation that the Company will file an NDA with the U.S. Food and Drug Administration for the MVID indication in mid-2027, and Jaguar’s plan to file a Form 8-K with the U.S. Securities and Exchange Commission regarding the Special Stock Dividend and terms of the Preferred Stock and associated risk factors. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “aim,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this release are only predictions. Jaguar has based these forward-looking statements largely on its current expectations and projections about future events. These forward-looking statements speak only as of the date of this release and are subject to several risks, uncertainties, and assumptions, some of which cannot be predicted or quantified and some of which are beyond Jaguar’s control. Except as required by applicable law, Jaguar does not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.
Source: Jaguar Health, Inc.
Contact:
hello@jaguar.health
Jaguar-JAGX
Exhibit 99.2
Risk Factors
Unless the context otherwise requires, references herein to “Jaguar,” the “Company,” “we,” “us,” and “our” refer to Jaguar Health, Inc. Terms used but not defined herein have the respective meanings set forth in the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on October 5, 2026 (the “Current Report”). The risk factors discussed below contain description of the terms and conditions of the form of the Certificate of Designation of Preferences, Rights and Limitations of Series R Convertible Preferred Stock (the “Certificate of Designation”). Such description does not purport to be complete and is qualified in its entirety by reference to the full text of the Certificate of Designation, a copy of which is filed as Exhibit 3.1 to the Current Report.
Risks Related to the Preferred Stock Dividend
The potential issuance of a large number of shares of Common Stock upon the conversion of our Series R Convertible Preferred Stock (the “Series R Preferred Stock”) may have a negative effect on the trading price of our Common Stock as well as a significant dilutive effect.
The Certificate of Designation provides that all of the then outstanding shares of Series R Preferred Stock shall convert, as of November 2, 2026 (the “Conversion Date”), to shares of Common Stock (the “Conversion Shares”) at a ratio, for each share of Series R Preferred Stock (the “Series R Conversion Ratio”), of five shares of Common Stock, subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of our Common Stock that occur after the original issue date of Series R Preferred Stock.
This conversion of the Series R Preferred Stock will result in the issuance of a substantial number of additional shares of our Common Stock and, as a result, the percentage ownership and voting power held by our stockholders who do not receive the Series R Preferred Stock as described below will be significantly reduced. Such stockholders will experience significant dilution upon conversion of the Series R Preferred Stock.
A stockholder’s entitlement to the dividend of Series R Preferred Stock (the “Preferred Stock Dividend”) as declared by the board of directors of the Company (the “Board”) is determined by whether such stockholder holds shares of our Common Stock as of the Record Date (as defined hereunder) for the Preferred Stock Dividend.
Our Board set October 13, 2026 as the record date (the “Record Date”) and October 15, 2026 as the dividend payment date (the “Dividend Payment Date”) for the Preferred Stock Dividend. The ex-dividend date will be announced as soon as it is determined by the Nasdaq Stock Market.
By way of example only, assuming the ex-dividend date is October 16, 2026, one business day after the Preferred Stock Dividend is paid (the “Assumed Ex-Dividend Date”), if a person sells shares of our Common Stock on October 15, 2026, the Dividend Payment Date, even though such person is a holder of record of our Common Stock when the Preferred Stock Dividend is paid, such dividend would be paid to the buyer of the Common Stock who is the holder of record as of the Assumed Ex-Dividend Date rather than such person, because such person has sold our Common Stock prior to the Assumed Ex-Dividend Date.
As such, any person who trades our Common Stock in proximity to the Preferred Stock Dividend timeline may face negative unintended outcomes, and as such may not be able to receive, proportionally or at all, benefits from the Preferred Stock Dividend, even if such persons hold shares of our Common Stock on the Record Date. Such persons will experience greater dilution than the stockholders who enjoy the rights and benefits from the Preferred Stock Dividend.
Because the Series R Conversion Ratio is five shares of Common Stock (subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of our Common Stock that occur after the original issue date of Series R Preferred Stock), the magnitude of the dilutive effect of the Conversion will be significant to those stockholders who do not receive our Preferred Stock Dividend
and hold such shares of Series R Preferred Stock through the Conversion Date. Moreover, any sales of shares of Common Stock by us under our existing At The Market Offering Agreement, dated December 10, 2021, with Ladenburg Thalmann & Co. Inc. (as amended) and exchanges of our existing debt for shares of our Common Stock after the Record Date pursuant to Section 3(a)(9) of the Securities Act of 1933, as amended (the “Securities Act”), for example, could result in significant future dilution to our holders of Common Stock acquired after the dates outlined above who do not benefit from holding our Series R Preferred Stock.
By way of example only, assuming there are 2,281,247 shares of Series R Preferred Stock outstanding, which is the total number of shares of Series R Preferred Stock that would be received by holders of record of (i) the 2,138,712 shares of Common Stock outstanding as of October 1, 2026 and (ii) those certain warrants to purchase up to 142,535 shares of Common Stock with dividend rights (the “Eligible Warrants”) outstanding as of October 1, 2026, assuming October 1, 2026 is the record date for such dividend (the “Assumed Series R Share Amount”), a maximum of 11,406,235 shares of our Common Stock would be issued upon conversion upon conversion of the Series R Preferred Stock on the Conversion Date. Based on the shares of our Common Stock outstanding as of October 1, 2026, which was 2,138,712, and assuming no issuance of additional shares of Common Stock between the Record Date and the Conversion Date, the shares of Common Stock issued upon the full conversion of the Series R Preferred Stock would represent approximately 83.3% of our outstanding Common Stock immediately following the Conversion Date (after giving effect to such conversion and assuming full exercise of the Eligible Warrants into shares of Common Stock).
In addition, the beneficial ownership percentage in our Common Stock of holders of our Series R Preferred Stock on the Conversion Date (the “Existing Common Stockholders”) will depend on the number of additional shares of Common Stock that we issue between the Record Date and the Conversion Date, if any (each an “Additional Issuance”, and collectively, the “Additional Issuances”). The greater the number of shares of Common Stock issued in Additional Issuances, assuming Existing Common Stockholders do not receive shares in such Additional Issuances, the smaller the beneficial ownership percentage in our Common Stock by the Existing Common Stockholders immediately following the Conversion Date and vice versa. However, because the size of the Additional Issuances that the Company will make, if any, is uncertain as of the date of this Current Report, the exact magnitude of the dilutive effect of the Additional Issuances cannot be conclusively determined as of this date.
For illustration purposes only, below is a table showing the ownership percentage of the Existing Common Stockholders, with and without the Conversion Shares issuable upon conversion of the shares of Series R Preferred Stock issued in the Series R Preferred Stock Dividend, in the event of hypothetical Additional Issuances of 350%, 600% and 650%, respectively, of the total number of shares of Common Stock held by the Existing Common Stockholders as of the Record Date. When the Additional Issuances are less than 600% of the total number of shares of Common Stock held by the Existing Common Stockholders on the Record Date, the Existing Common Stockholders, upon receiving the Conversion Shares in full, would collectively remain the majority holders of the Company’s Common Stock. However, in the event of Additional Issuances of more than 600% of the total number of shares of Common Stock held by the Existing Common Stockholders on the Record Date, the Existing Common Stockholders, even after receiving the Conversion Shares in full, would collectively own less than 50% of the Company’s issued and outstanding shares of Common Stock immediately following the Conversion Date.
| Scenario A – 3.5x Additional Issuance |
Scenario B – 6x Additional Issuance |
Scenario C – 6.5x Additional Issuance |
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| Total Number of Shares of Common Stock Entitled to Series R Preferred Dividend Held by Existing Common Stockholders* |
2,281,247 | 2,281,247 | 2,281,247 | |||||||||
| Total Number of Shares of Series R Preferred Stock Receivable by Existing Common Stockholders |
2,281,247 | 2,281,247 | 2,281,247 | |||||||||
| Total Number of Conversion Shares Receivable by Existing Common Stockholders |
11,406,235 | 11,406,235 | 11,406,235 | |||||||||
| Hypothetical Additional Issuances of Shares of Common Stock after the Record Date and before the Conversion Date |
7,984,365 | 13,687,482 | 14,828,106 | |||||||||
| Ownership Percentage of the Existing Common Stockholders after the Additional Issuances (Excluding the Conversion Shares from the Series R Preferred Stock Dividend)** |
22.2 | % | 14.3 | % | 13.3 | % | ||||||
| Ownership Percentage of the Existing Common Stockholders after the Additional Issuances (Including the Conversion Shares from Series R Preferred Stock Dividend)** |
63.2 | % | 50.0 | % | 48.0 | % | ||||||
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| * | Assuming (i) October 1, 2026 is the Record Date, and (ii) the Eligible Warrants outstanding as of October 1, 2026 to purchase an aggregate of up to 142,535 shares of Common Stock are fully exercised. As of October 1, 2026, 2,138,712 shares of Common Stock were outstanding. |
| ** | Assuming none of the Existing Common Stockholders acquire shares of Common Stock from the Additional Issuances. |
The potential for the issuance of such a substantial number of shares of Common Stock upon conversion of the Series R Preferred Stock may depress the price of our Common Stock regardless of our business performance. We may find it more difficult to raise additional equity capital while the Series R Preferred Stock is outstanding.
Holders of Eligible Warrants will not actually receive the Preferred Stock Dividend unless and until the exercise of the Eligible Warrants and will cease to be entitled to the Preferred Stock Dividend upon transfer of the Eligible Warrants.
In addition to the holders of record of shares of our Common Stock at the close of business on the Record Date, holders of certain warrants and pre-funded warrants to purchase, in aggregate, up to 142,535 shares of our Common Stock with dividend rights (the “Eligible Warrants”) outstanding at the close of business on the Record Date will also be entitled to the Preferred Stock Dividend. However, pursuant to the terms and conditions of the Eligible Warrants respectively, a holder of an Eligible Warrant will not actually receive shares of Series R Preferred Stock as a dividend (or alternatively, shares of our Common Stock issued upon conversion of the Series R Preferred Stock in accordance with the terms of the Certificate of Designation, if the Series R Preferred Stock has been converted), in respect of any shares of our Common Stock issuable upon exercise of the Eligible Warrant (the “Warrant Shares”), unless and until such holder exercises the Eligible Warrant at any time prior to the expiration of the Eligible Warrant.
Moreover, an Eligible Warrant may be transferrable by its holder, with the right to receive the Preferred Stock Dividend (or the Conversion Shares upon and after the conversion of Series R Preferred Stock, as described hereunder) transferrable along with such Eligible Warrant, pursuant to the terms of such Eligible Warrant (a “Transferrable Eligible Warrant”). In the event that a Transferrable Eligible Warrant is transferred by its holder in accordance with its terms before the Assumed Ex-Dividend Date, the transferee of such Transferrable Eligible Warrant shall become entitled to receive the Series R Preferred Stock as a dividend (or alternatively, the Conversion
Shares issued upon conversion of the Series R Preferred Stock in accordance with the terms of the Certificate of Designation, if the Series R Preferred Stock has been converted), in respect of the Warrant Shares issued upon exercise of the Transferrable Eligible Warrant by the transferee. The transferor of the Transferrable Eligible Warrant shall, upon such transfer, cease to have any right to receive the Preferred Stock Dividend (or the Conversion Shares upon and after the conversion of Series R Preferred Stock).
The liquidation preference of the Series R Preferred Stock is nominal, and Holders should not expect to receive meaningfully more than holders of our Common Stock upon a liquidation.
Pursuant to the terms of the Certificate of Designation, in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, following payment in full of the liquidation preference payable out of the assets of the Company to any series of Senior Preferred Stock (as defined therein) and before any distribution or payment out of the assets of the Company may be made to or set aside for the holders of Common Stock, and subject to the rights of the Company’s depositors or other creditors, each Holder of Series R Preferred Stock will be entitled to receive, in respect of each share of Series R Preferred Stock held by such Holder, a nominal amount equal to $0.0001 (the “Liquidation Preference”). After payment in full of such Liquidation Preference to the Holders, the remaining assets of the Company available for distribution to stockholders shall be distributed among the Holders and the holders of Common Stock and the holders of any other class or series of stock of the Company entitled to participate in the distribution of the residual assets of the Company, with each share of Series R Preferred Stock participating on an as-converted basis.
In the event of any Deemed Liquidation Event, Holders will be entitled to receive any Liquidation Preference. Rather, each share of Series R Preferred Stock will be entitled to receive, in respect of each share of Series R Preferred Stock held by a Holder, the cash, securities, property or other consideration, if any, that such Holder would have been entitled to receive in such Deemed Liquidation Event had such share of Series R Preferred Stock been converted into the applicable number of shares of Common Stock immediately prior to the consummation of such Deemed Liquidation Event, subject to the Maximum Percentage limitation on the Conversion.
As such, the Series R Preferred Stock provides little practical economic priority over the Common Stock in the event of a liquidation, and Holders should not view the Liquidation Preference as a source of downside protection.