Valion Bio, Inc.
For the period ended Nov 12, 2026. Filed Oct 16, 2026.
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Nov 12, 2026 · Filed Oct 16, 2026
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Dilution Analysis
Our Board evaluated the dilution potentially caused by the Plan Amendment in connection with its approval of the Plan Amendment and believes the potential dilutive impact of the increase in the number of shares of Common Stock proposed to be added to the 2021 Plan pursuant to the Plan Amendment is reasonable in light of the objectives and other considerations summarized above.
The table below shows the potential dilution resulting from the Plan Amendment based on the number of shares of our Common Stock outstanding as of September 15, 2026 and the number of shares of our Common Stock that would be outstanding on a pro-forma partially-diluted basis as of September 15, 2026, calculated based on the formula and assumptions described in footnote (2) to the below table. We believe it is appropriate to measure dilution relative to our pro-forma partially-diluted capitalization given the number of shares of Common Stock potentially issuable upon conversion of the shares of Series C Preferred that may be sold and issued to the Series C Preferred Investors pursuant to the Preferred Offering, upon conversion of the Note pursuant to the Note Offering, and upon conversion of the shares of Series B Preferred that may be sold and issued to 3i pursuant to the Series B Preferred Purchase Agreement, as we believe such issuances and conversions are probable.
We believe that the number of shares of Common Stock proposed to be added to the 2021 Plan by the Plan Amendment represents a reasonable amount of potential equity dilution and will allow us to continue granting equity awards, while also pursuing our objectives to (i) create a culture of ownership among our employee and director base, (ii) align the interests of our employees and stockholders, (iii) attract and retain top talent, and (iv) reduce the amount of cash used in our compensation programs in order to build the amount of cash we have available to operate and grow our business.
| Shares authorized under the 2021 Plan prior to the Plan Amendment: | |
|---|---|
| Total shares authorized for issuance under the 2021 Plan as of September 15, 2026 | 128,783 |
| Total shares subject to outstanding awards as of September 15, 2026 | 14,662 |
| Available shares as of September 15, 2026 (prior to Plan Amendment and any future evergreen increases) | 114,121 |
| Additional shares requested for the 2021 Plan pursuant to the Plan Amendment: | 272,000 |
| Total potential 2021 Plan overhang after the Plan Amendment:(1) | 400,783 |
| Pro-forma partially diluted shares outstanding as of September 15, 2026, including additional shares requested under Plan Amendment:(2) | 5,500,764 |
| Potential pro-forma partially-diluted overhang, assuming the Plan Amendment: | 4.94% |
| (1) | Total shares authorized under the 2021 Plan after the Plan Amendment is calculated as the sum of: (i) the total shares of Common Stock that remain available for issuance under the 2021 Plan as of September 15, 2026 (excluding any shares that may be added in the future pursuant to the evergreen provision of the 2021 Plan); (ii) the total number of shares of Common Stock issuable under awards made under the 2021 Plan that were outstanding as of September 15, 2026; and (iii) the 272,000 additional shares of Common Stock to be added to the 2021 Plan by the Plan Amendment, assuming stockholder approval of this Proposal 2. |
| (2) | Pro forma partially-diluted shares outstanding as of September 15, 2026 is calculated as the sum of, as of September 15, 2026: (i) 1,285,731 shares of Common Stock outstanding; (ii) 30,303 shares of Common Stock issuable upon conversion of all shares of our Series A Non-Voting Convertible Preferred Stock (“Series A Preferred”) outstanding; (iii) 906,630 shares of our Common Stock that would be issuable upon conversion of the shares of our Series B Preferred (assuming the conversion of all such shares of Series B Preferred into Common Stock at a conversion ratio equal to 90% of the lowest closing VWAP of our Common Stock on the Nasdaq Capital Market for the five trading days immediately preceding September 15, 2026), subject to the floor price; and (iv) 3,006,100 shares of our Common Stock that would be issuable upon conversion of our Series C Preferred (assuming the conversion of all such shares of Series C Preferred into Common Stock at a conversion ratio equal to 93% of the lowest closing VWAP of our Common Stock on the Nasdaq Capital Market for the five trading days immediately preceding September 15, 2026), subject to the floor price. This calculation does not take into account any limitations on conversion of the Series A Preferred, Series B Preferred or Series C Preferred, including without limitation beneficial ownership limitations and stockholder approval requirements, and assumes that all such shares are converted in full. |
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