SHAREHOLDERS’ EQUITY

12 Months Ended

Dec. 31, 2024

Equity [Abstract]

SHAREHOLDERS’ EQUITY

NOTE 6 – SHAREHOLDERS’ EQUITY

Common Stock

Authorized Shares

The Company’s Certificate of Incorporation, as filed with the State of Delaware on May 10, 2023, following the Company’s conversion from a California corporation into a Delaware corporation, authorizes the Company to issue up to 120,000,000 shares, consisting of 100,000,000 shares of common stock, par value of $0.001 per share, and 20,000,000 shares of preferred stock, par value $0.001 per share. Holders of shares of common stock have full voting rights, one vote for each share held of record. Shareholders are entitled to receive dividends as may be declared from time to time by the board of directors out of funds legally available and share pro rata in any distributions with shareholders upon liquidation. Shareholders have no conversion, pre-emptive or subscription rights. All outstanding shares of common stock are fully paid and non-assessable. As of December 31, 2024 and 2023, there were 13,736,597 and 10,562,640 shares of common stock issued and outstanding, respectively, and no shares of preferred stock outstanding.

Common Shares Issued in Connection with a Shareholder Dispute

During the year ended December 31, 2023, the Company issued 228,284 shares of its common stock to two shareholders relating to the settlement of a dispute. The Company valued the shares on the date of grant to be $912. The value of the shares was recorded in general and administrative expenses during the year ended December 31, 2023. Upon the issuance of the shares, the shareholders entered into agreements with the Company under which they agreed to the final settlement of the dispute.

Common Stock Issued for Cash Upon Closing of the Company’s IPO

On September 17, 2024, the Company completed the IPO of its common stock in which the Company issued and sold 1,550,000 shares of its common stock at a public offering price of $4.00 per share. The total gross proceeds of the IPO were $6,200 and the Company raised $5,524 in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company, excluding deferred offering costs of $872. The underwriters were granted a 45-day option to purchase up to an additional 232,500 shares of common stock from the Company. No additional shares were sold under the 45-day option.

On September 17, 2024, pursuant to the underwriting agreement, the Company issued common stock purchase warrants to the underwriters to purchase up to 108,500 shares of the Company’s common stock, at an exercise price of $4.80 per share, subject to adjustments. The warrants will be exercisable during the period commencing on March 16, 2025 and ending on September 17, 2029, and may be exercised on a cashless basis under certain circumstances.

Common Stock Issued Upon Conversion of Accounts Payable

During the year ended December 31, 2024, the Company entered into an agreement with Cedars-Sinai Medical Center (“Cedars”) under which Cedars agreed to convert $750 of the total accounts payable due to them into 312,500 shares of the Company’s common stock, with such conversion to occur upon the closing of the Company’s IPO. The conversion price of the shares was equal to 60% of the per share IPO price, or $2.40 per share. Upon the closing of the IPO, the shares were issued to Cedars and the debt was forgiven. The fair value of the shares was $1,250. The Company recorded the difference between the fair value of the shares and the debt forgiven as a financing cost of $500, which was recorded during the year ended December 31, 2024.

Also, during the year ended December 31, 2024, the Company entered into another agreement with Cedars under which Cedars agreed to convert $200 of the total accounts payable due to them into 150,830 shares of the Company’s common stock. The conversion price of the shares was equal to 60% of the closing price of the Company’s common stock on the date of the agreement, or $1.33 per share. The fair value of the shares was $333. The Company recorded the difference between the fair value of the shares and the debt forgiven as a financing cost of $133, which was recorded during the year ended December 31, 2024.

During the year ended December 31, 2024, the Company entered into an agreement with its Chief Financial Officer (“CFO”), under which he agreed to convert $172 of the total accounts payable due to him into 51,610 shares of the Company’s common stock with such conversion to occur upon the closing of the Company’s IPO. The conversion price of the shares was equal to 83% of the IPO price. Upon the closing of the IPO, the shares were issued to the CFO. The fair value of the shares was $206. The Company recorded the difference between the fair value of the shares and the accounts payable forgiven as a financing cost of $34, which was recorded during the year ended December 31, 2024. No amounts were owed to the CFO as of December 31, 2024.

In summary, during the year ended December 31, 2024, the company issued 514,940 shares of its common stock with a fair value of $1,789 relating to the conversion of its account payable.

Common Stock Issued for Advances to Vendors

On October 1, 2024, the Company entered into a consulting agreement with Cross Current Capital LLC (“Cross Current”) and Alan Masley (the “Advisor”) pursuant to which Cross Current agreed to provide certain financial and business consulting services to the Company (see Note 7). For the services to be rendered under the agreement, the Company agreed to issue to the Advisor restricted shares of the Company’s common stock (RSUs) in an amount equal to $500, which RSUs are subject to a six-month vesting period and will be subject to a “true up” at the end of the vesting period on April 1, 2025. On the date of the agreement, the Company issued 367,647 RSUs to the Advisor based on the closing price of the Company’s common stock on that date. The Company accounted for the value of the RSU as an advance to the vendor for future services to be performed (see Note 2). None of these RSUs vested and no shares were issued during the year ended December 31, 2024. If at April 1, 2025, the shares issued to the Advisor are valued at less than $500 based on the closing price of the Company’s common stock on that day, additional shares will be issued to the Advisor as a “true up.” In the event the shares are valued at more than $500 on April 1, 2025, the Advisor will be required to return any shares to the Company in excess of the $500 value.

Common Stock Issued for Deferred Offering Costs

On November 12, 2024, the Company entered into an agreement with Helena Global Investment Opportunities I LTD (“Helena”) pursuant to which Helena agreed to provide certain financial services to the Company (see Note 7). In exchange for the services, the Company issued Helena 670,641 shares of its common stock, which shares were equal to $900 divided by the lowest one-day VWAP during the five trading days immediately preceding entry into the agreement and valued at $1,378 on the date of issuance. The Company accounted for the value of the shares issued as an advance to the vendor for future services to be performed (see Note 2). The shares issued to Helena will be subject to a “true up” after the registration statement is declared effective, at which time additional shares will be issuable to Helena in the event the value of the shares is less than $900 (or shares will be returned by Helena to the Company in the event the shares are valued at more than $900).

Grant of Restricted Stock Units (RSUs)

The following table summarizes restricted stock unit activity during the year ended December 31, 2024:

	Number of Restricted Shares			Fair Value			Weighted Average Grant Date Fair Value
Non-vested, December 31, 2023		—		$	—		$	—
Granted		240,341			532			2.21
Vested		(68,341	)		(218	)		3.19
Forfeited		—			—			—
Non-vested, December 31, 2024		172,000		$	314		$	1.83

Common Stock Issued for Services

On September 23, 2024, the Company entered into a strategic advisory agreement with Belair Capital Advisors Inc. (“Belair”). During the one-year term of the agreement, in exchange for its services, the Company issued Belair 50,000 RSUs, which vest six months from the date of issuance. The fair value of the shares on the date of grant was $100, which value will be amortized over the one-year service period of the agreement. None of these shares vested or were issued during the year ended December 31, 2024. During the year ended December 31, 2024, the Company recorded $29 of stock compensation for the fair value vesting of this restricted common stock.

Officer Compensation

Upon the closing of the Company’s IPO, the Company entered into agreements with each of its four officers. Such agreements provided for annual cash compensation and annual grants of RSUs in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The RSU grants vest annually and are subject to full acceleration of vesting upon the sale of the Company. Upon the closing of the IPO, the Company granted the officers 92,000 RSUs. The fair value of the shares on the date of grant was $226. None of these RSUs vested or were converted into shares of common stock during the year ended December 31, 2024. 

During the three months ended December 31, 2024, the Company issued its CFO 32,071 RSUs relating to bonus RSUs issued as a result of the completion of the Company’s IPO. The Company valued the RSUs on the date of the grant to be $42. The RSUs vested upon the date of grant and were issued to the CFO.

During the year ended December 31, 2024, the Company recorded $93 of stock compensation for the fair value vesting of this restricted common stock.

Loans from Officers

During the year ended December 31, 2024, the Company entered into note payable agreements with three of its officers in the aggregate amount of $142 (see Note 4). In consideration for making the loans to the Company, the Company issued the officers 36,270 shares of the Company’s common stock. The Company valued the shares on the date of grant to be $89. The shares vested upon grant and were issued to the officers. During the year ended December 31, 2024, the Company recorded $89 of stock compensation for the fair value vesting of this restricted common stock.

Director Compensation

Upon the closing of the Company’s IPO, the Company entered into director agreements with each of its three independent directors. Such agreements provide for annual cash compensation of $50, payable in quarterly installments in arrears, plus an additional $10 cash compensation for the chair of the audit committee. In addition, the Company’s policy provides that, upon initial election or appointment to our board of directors, each new non-employee director will be granted a one-time grant, or Director Initial Grant, of 10,000 RSUs that will vest in substantially equal annual installments over a period of three years. The Director Initial Grant is subject to full acceleration of vesting upon the sale of the Company, in accordance with the terms of the Company’s 2023 Equity Incentive Plan. The 30,000 RSUs were granted effective on the IPO closing date. The fair value of the shares on the date of grant was $74. None of these shares vested or were issued during the year ended December 31, 2024.  During the year ended December 31, 2024, the Company recorded $7 of stock compensation for the fair value vesting of restricted common stock.

RSU Summary

During the year ended December 31, 2024, the Company recorded $218 of stock compensation-related expense for the fair value vesting of restricted common stock. As of December 31, 2024, $314 of unamortized compensation remained.

Adoption of the 2023 Equity Incentive Plan 

In July 2023, the Company’s board of directors and stockholders adopted the 2023 Equity Incentive Plan (the “2023 Plan”). Under the 2023 Plan, the Company may grant incentive stock options to employees, including employees of any parent or subsidiary, and nonstatutory stock options, stock appreciation rights, restricted stock awards, RSU awards, performance awards and other forms of stock compensation to employees, directors and consultants, including employees and consultants of the Company’s affiliates. As approved, a total of 1,650,000 shares of common stock were initially reserved for issuance under the 2023 Plan. No shares were issued under the 2023 Plan as of December 31, 2023 and there were a total of 172,000 RSUs outstanding under the 2023 Plan as of December 31, 2024. As of December 31, 2024, a total of 1,478,000 shares remained available for issuance under the 2023 Plan.

Stock Warrants

The table below summarizes the Company’s warrant activities for years ended December 31, 2023 and 2024:

	Number of Warrant Shares			Exercise Price Range Per Share		Weighted Average Exercise Price
Balance, December 31, 2022		180,000		$	4.17 - 8.33	$	4.86
Granted		–			–		–
Cancelled		–			–		–
Exercised		–			–		–
Forfeited/Expired		(30,000	)		8.33		8.33
Balance, December 31, 2023		150,000			4.17		4.17
Granted		128,188			2.40 - 4.80		4.43
Cancelled		–			–		–
Exercised		–			–		–
Forfeited/Expired		–			–		–
Balance, December 31, 2024		278,188		$	2.40 - 4.80	$	4.29
Vested and exercisable, December 31, 2024		169,688		$	2.40 - 4.17	$	3.96

The following table summarizes information concerning outstanding and exercisable warrants as of December 31, 2024:

		Warrants Outstanding						Warrants Exercisable
Range of Exercise Prices		Number Outstanding		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price		Number Exercisable		Average Remaining Contractual Life (in years)		Weighted Average Exercise Price
$	2.40		19,688		4.75	$	2.40		19,688		4.75	$	2.40
	4.17 - 4.80		258,500		2.14		4.43		150,000		0.25		4.17
$	2.40 - 4.17		278,188		2.32	$	4.29		169,688		0.77	$	4.17

During the year ended December 31, 2022, the Company entered into a convertible note payable agreement with an individual in the amount of $250. In connection with that agreement, the Company granted a warrant to the lender to purchase up to 150,000 shares of the Company’s common stock with an exercise price of $4.17 per share. The warrant vested upon grant and expires in March 2025.

On September 17, 2024, upon the closing of the IPO, the Company issued stock warrants to the participating underwriters for the purchase of up to 108,500 shares of the Company’s common stock, at an exercise price of $4.80 per share, subject to adjustment. The warrants will be exercisable during the period commencing on March 16, 2025, and ending on September 16, 2029, and may be exercised on a cashless basis under certain circumstances.

On September 17, 2024, upon the closing of the IPO, the Company issued a stock warrant to the underwriters for the purchase of 19,688 shares of common stock at an exercise price of $2.40 per share. The warrant vested upon grant. The warrant was issued to the underwriters as they were the placement agents for the convertible notes payable (see Note 5). The Company valued the warrant using a Black-Scholes pricing model with the following weighted average assumptions: fair value of the Company’s stock price of $2.46 per share, the expected term of 2.5 years, volatility of 100%, dividend rate of 0%, and risk-free interest rate of 3.49%. The fair value of the warrant of $29 was recorded to general and administrative expense during the year ended December 31, 2024. The warrant expires five years from the date of grant.

There was no intrinsic value for warrant shares outstanding at December 31, 2024.