Preliminary Proxy Statement (Form PRE 14A)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

Processa Pharmaceuticals, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply):

PRELIMINARY PROXY STATEMENT DATED    ,    -SUBJECT TO COMPLETION

 

Dear Processa Stockholders:

You are cordially invited to attend a Special Meeting of Stockholders of Processa Pharmaceuticals, Inc. ("Processa," the "Company," "we," "our" or "us"), which will be held on    ,    ,     at     a.m. Eastern Time (the "Special Meeting"), unless postponed or adjourned to a later date. To facilitate stockholder participation in the Special Meeting, the Special Meeting will be held through a live webcast at www.virtualshareholdermeeting.com/PCSA2027SM. You will not be able to attend the meeting in person. The record date for the Special Meeting is    ,    . Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the Special Meeting or any adjournment thereof.

On July 28, 2026, we completed the merger with Vidya Therapeutics, Inc., a Delaware corporation ("Vidya"), in accordance with the terms of the Agreement and Plan of Merger (the "Merger Agreement"), by and among the Company, Venus Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("Merger Sub I"), Venus Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company ("Merger Sub II"), and Vidya, pursuant to which Merger Sub I merged with and into Vidya, with Vidya surviving and becoming a wholly owned subsidiary of the Company (the "First Merger"), and, immediately following the First Merger, Vidya merged with and into Merger Sub II, with Merger Sub II surviving and remaining a wholly owned subsidiary of the Company (together with the First Merger, the "Merger").

Under the terms of the Merger Agreement, following the closing of the Merger (the "Closing"), (i) the Company issued to the stockholders of Vidya an aggregate of 142,254.972 shares (the "Merger Preferred Shares") of Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock") (as described below), each share of which is convertible into 1,000 shares of the Company's common stock, par value $0.0001 per share ("common stock") (representing 142,254,972 shares on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations), subject to receipt of approval of the Conversion Proposal (as defined below) and the beneficial ownership limitations set by each holder, and (ii) all outstanding options to purchase Vidya common stock (the "Vidya Options") were assumed by the Company and converted into options to purchase an aggregate of 1,047,524 shares of common stock.

In connection with the Merger, on July 28, 2026, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with the investors named therein (the "Investors"), pursuant to which, on July 30, 2026 (the "PIPE Closing"), the Company issued and sold an aggregate of 163,774.679 shares of Series A Preferred Stock (the "PIPE Preferred Shares") (representing 163,774,679 shares of common stock on an as-converted-to-common basis without giving effect to any beneficial ownership limitations), subject to receipt of approval of the Conversion Proposal and the beneficial ownership limitations set by each holder, at a price of $1,221.19 per share of Series A Preferred Stock for aggregate gross proceeds of approximately $200 million (such transaction, the "2026 Private Placement" and, together with the Merger and the other transactions and actions contemplated by the Merger Agreement, the "Merger Transactions").

On July 27, 2026, the Company entered into an engagement letter (the "Tungsten Engagement Letter") with Tungsten Partners LLC d/b/a Tungsten Advisors ("Tungsten") and Finalis Securities, LLC ("Finalis"), pursuant to which Tungsten and Finalis provided financial advisory services to the Company in connection with the Merger. The Tungsten Engagement Letter provided for an advisory fee, a transaction success fee upon the closing of the Merger and the reimbursement of certain expenses, which were satisfied by the issuance of an aggregate of 544.551 shares of Series A Preferred Stock to service providers of Tungsten and to Finalis.

Subject to the receipt of stockholder approval of Proposals No. 1 through No. 4 (the "Required Company Stockholder Matters"), each outstanding share of Series A Preferred Stock will automatically convert into 1,000 shares of common stock, subject to certain beneficial ownership limitations established by each holder. As a result of the transactions, immediately following the PIPE Closing, equityholders of the Company immediately prior to the Merger owned approximately 1.4% of the common stock of the Company, equityholders of Vidya immediately prior to the Merger owned approximately 46% of the common stock of the Company and the Investors in the 2026 Private

Placement owned approximately 52.6% of the common stock of the Company, in each case, calculated on a fully-diluted, as-converted-to-common basis (and without giving effect to any beneficial ownership limitations) and based on the implied equity values of the Company and Vidya.

Pursuant to the Merger Agreement, we are required to use our reasonable best efforts to file an initial listing application with Nasdaq (the "Nasdaq Listing Application") to the extent required by the Nasdaq Listing Rules and to cause such Nasdaq Listing Application to be conditionally approved prior to the date of the Special Meeting.

At the Special Meeting, we will ask our stockholders:

As described in the accompanying proxy statement (the "Proxy Statement"), in connection with the execution of the Merger Agreement, the Company and Vidya entered into stockholder support agreements (the "Support Agreements") with certain of the Company's officers and directors (solely in their capacity as stockholders), representing approximately    % of shares of common stock outstanding on the record date. The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of common stock owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements.

After careful consideration, the Board has unanimously determined to recommend that our stockholders vote "FOR" the Conversion Proposal, "FOR" the Minimum Price Proposal, "FOR" the 2027 Plan Proposal, "FOR" the 2027 ESPP Proposal and "FOR" the Adjournment Proposal.

Shares of our common stock are currently listed on The Nasdaq Capital Market under the symbol "PCSA." If the Required Company Stockholder Matters are approved and our Nasdaq Listing Application is approved, it is expected that we will change our name to "Vidya Therapeutics, Inc." and our common stock will trade on The Nasdaq Capital Market under the symbol "VDYA."

More information about the Merger and the Required Company Stockholder Matters is contained in the accompanying Proxy Statement. We urge you to read the Proxy Statement carefully and in its entirety.

Your vote is important. Whether or not you expect to attend the Special Meeting, please submit voting instructions for your shares promptly by using the directions on your proxy card, to vote by one of the following methods: (1) over the Internet before the Special Meeting at www.proxyvote.com and during the Special Meeting at www.virtualshareholdermeeting.com/PCSA2027SM, (2) by telephone by calling the toll-free number at 1-800-690-6903, or (3) by marking, dating, and signing your proxy card and returning it in the accompanying postage-paid envelope. Even if you have voted by proxy, you may still vote online if you attend the virtual Special Meeting. Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to vote online at the Special Meeting, you must obtain a proxy issued in your name from that record holder.

We thank you for your consideration and continued support.

This Proxy Statement is dated    , 2026 and is first being mailed to stockholders on or about    , 2026.

PRELIMINARY PROXY STATEMENT DATED      -SUBJECT TO COMPLETION

PROCESSA PHARMACEUTICALS, INC.

601 21st Street, Suite 300

Vero Beach, Florida 32960

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

To Be Held On       ,

Dear Stockholder:

The Special Meeting of stockholders of Processa Pharmaceuticals, Inc. (the "Company") will be held on       ,      ,   at        a.m. Eastern Time (the "Special Meeting"). To facilitate stockholder participation in the Special Meeting, the Special Meeting will be held through a live webcast at www.virtualshareholdermeeting.com/PCSA2027SM. You will not be able to attend the meeting in person.

The meeting will be held for the following purposes:

These items of business are more fully described in the Proxy Statement accompanying this Notice. The Special Meeting will be held virtually through a live webcast. You will be able to attend the Special Meeting, submit questions and vote during the live webcast by visiting www.virtualshareholdermeeting.com/PCSA2027SM entering the Control Number included in your proxy card, voting instruction form, or in the instructions that you received via email. Please refer to the additional logistical details and recommendations in the accompanying Proxy Statement. You may log-in beginning at        a.m. Eastern Time, on     ,    ,     . The record date for the Special Meeting is      ,     . Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the meeting or any adjournment thereof.

By Order of the Board of Directors,

George Ng

Chief Executive Officer

Vero Beach, Florida

     , 2026

On or about       , 2026, we expect to mail to our stockholders the Proxy Statement and proxy card.

Whether or not you expect to attend the virtual Special Meeting, please submit voting instructions for your shares promptly using the directions on your proxy card, to vote by one of the following methods: (1) over the Internet before the Special Meeting at www.proxyvote.com and during the Special Meeting at www.virtualshareholdermeeting.com/PCSA2027SM, (2) by telephone by calling the toll-free number 1-800-690-6903, or (3) by marking, dating, and signing your proxy card and returning it in the accompanying postage-paid envelope. Even if you have voted by proxy, you may still vote online if you attend the virtual Special Meeting. Please note, however, that if your shares are held of record by a broker, bank, or other nominee and you wish to vote online at the Special Meeting, you must obtain a proxy issued in your name from that record holder.

TABLE OF CONTENTS

PROCESSA PHARMACEUTICALS, INC.

601 21^st Street, Suite 300

Vero Beach, Florida 32960

PROXY STATEMENT

 

For the Special Meeting of Stockholders

 

To Be Held on    ,

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why did I receive these proxy materials?

We have sent you the Proxy Statement and proxy card (the "Proxy Materials") because the Board of Directors (the "Board" or "Board of Directors") of Processa Pharmaceuticals, Inc. (the "Company") is soliciting your proxy to vote at the Special Meeting of Stockholders, including at any adjournments or postponements of the meeting. The Proxy Statement summarizes the information you will need to know to cast an informed vote at the Special Meeting. You are invited to attend the Special Meeting to vote on the proposals as described in the Proxy Statement. However, you do not need to attend the Special Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy over the telephone or through the internet.

We intend to mail the Proxy Materials on or about    ,    to all stockholders of record entitled to vote at the Special Meeting.

How do I attend the Special Meeting?

To facilitate stockholder participation in the Special Meeting, this year the Special Meeting will be held through a live webcast at www.virtualshareholdermeeting.com/PCSA2027SM. You will not be able to attend the Special Meeting in person. If you attend the Special Meeting online, you will be able to vote and submit questions at www.virtualshareholdermeeting.com/PCSA2026SM.

You are entitled to attend the Special Meeting if you were a stockholder as of the close of business on    ,    , the record date, or hold a valid proxy for the meeting. To be admitted to the Special Meeting, you will need to visit www.virtualshareholdermeeting.com/PCSA2027SM and enter the Control Number found next to the label "Control Number" on your proxy card, or voting instruction form. If you are a beneficial stockholder, you should contact the bank, broker or other institution where you hold your account well in advance of the meeting if you have questions about obtaining your control number/proxy to vote.

Whether or not you participate in the Special Meeting, it is important that you vote your shares.

We encourage you to access the Special Meeting before it begins. Online check-in will start approximately 15 minutes before the meeting on    ,    .

Will a list of record stockholders as of the record date be available?

A list of our record stockholders as of the close of business on    , which is the record date for the Special Meeting, will be available for inspection at our corporate office for the 10 days ending on the day before the Special Meeting. If you want to inspect the stockholder list, call our office at 772-453-2899 to speak with our Investor Relations department to schedule an appointment.

For the Special Meeting, how do we ask questions of management and the board?

As part of the Special Meeting, we will hold a live question and answer session, during which we intend, time permitting, to answer all written questions pertinent to the meeting matters that are submitted by stockholders before or during the meeting in accordance with the Special Meeting's Rules of Conduct, which will be posted on the Special Meeting website. Stockholders may submit questions prior to the day of the meeting at www.proxyvote.com after logging in with their unique control number found on the proxy card (printed in the box and marked by the arrow), next to the label for postal mail

recipients or within the body of the email sending the proxy statement. Stockholders may submit questions the day of or during the Special Meeting through www.virtualshareholdermeeting.com/PCSA2027SM. Questions and answers may be grouped by topic and substantially similar questions will be grouped and answered once. We reserve the right to edit or reject questions we deem profane or otherwise inappropriate.

Who can vote at the Special Meeting?

Only stockholders of record at the close of business on    , will be entitled to vote at the Special Meeting. On this record date, there were     shares of common stock outstanding and entitled to vote. On the record date, there were 306,574.202 shares of Series A Preferred Stock issued and outstanding; however, the shares of Series A Preferred Stock are not entitled to vote on the matters being considered at the Special Meeting.

Stockholder of Record: Shares Registered in Your Name

If on    ,    , your shares were registered directly in your name with our transfer agent, Continental Stock Transfer & Trust Company, then you are a stockholder of record. As a stockholder of record, you may vote virtually at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on    ,    , your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in "street name" and the Proxy Materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the Special Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the Special Meeting. However, since you are not the stockholder of record, you may not vote your shares virtually at the meeting unless you request and obtain a valid legal proxy from your broker or other agent.

What am I voting on?

There are five matters scheduled for a vote:

With respect to the Conversion Proposal, stockholders should note that a "change of control" as described under Nasdaq Listing Rule 5635(b) applies only with respect to the application of such rule and does not constitute a "change of control" for purposes of Delaware law or our organizational documents.

What if another matter is properly brought before the meeting?

The Board of Directors knows of no other matters that will be presented for consideration at the Special Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.

Are stockholders being asked to vote on the Merger Agreement or the Merger described herein?

No. The Merger was completed on July 28, 2026 and we are not required to seek, nor are we seeking, stockholder approval of the Merger or the Merger Agreement. Rather, for purposes of complying with the Nasdaq Listing Rules, we are seeking stockholder approval for the issuance of shares of common stock of the Company upon conversion of the outstanding shares of Series A Preferred Stock and exercise of the Vidya Options that we issued, or assumed (as applicable), in the Merger. The Company and Vidya discussed various potential transaction structures and, due to the desire of both parties to consummate the Merger at the earliest possible time, the Board approved a transaction structure that did not require the approval of the stockholders of the Company for the consummation of the Merger.

How do I vote?

You may vote "For" or "Against" or abstain from voting on each of the five proposals presented at the Special Meeting.

The procedures for voting are:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote virtually at the Special Meeting or vote by proxy in one of three ways: online, by telephone or using the enclosed proxy card. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Special Meeting and vote virtually even if you have already voted by proxy.

To vote during the Special Meeting, if you are a stockholder of record as of the record date, follow the instructions provided via e-mail after registering at www.virtualshareholdermeeting.com/PCSA2027SM. You will need to enter the Control Number found on the enclosed proxy card.

To vote prior to the Special Meeting you may vote via the Internet; by telephone; or by completing and returning the enclosed proxy card or voting instruction form, as described below.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received the Proxy Materials from that organization rather than from us. Please follow the voting instruction form to ensure that your vote is counted. To vote live online at the Special Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these Proxy Materials, or contact your broker or bank to request a proxy form.

Internet proxy voting will be provided to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers and telephone companies.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you own as of   ,   .

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing your proxy card, by telephone or through the internet at the Special Meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange ("NYSE") deems the particular proposal to be a "routine" matter. Brokers and nominees can use their discretion to vote "uninstructed" shares with respect to matters that are considered to be "routine," but not with respect to "non-routine" matters. Under the rules and interpretations of the NYSE, "non-routine" matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on any of the proposals presented at the Special Meeting.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, "FOR" the Conversion Proposal, "FOR" the Minimum Price Proposal, "FOR" the 2027 Plan Proposal, "FOR" the 2027 ESPP Proposal and "FOR" the Adjournment Proposal. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

We are soliciting this proxy on behalf of our Board of Directors and will pay all expenses associated with this solicitation. In addition to mailing these Proxy Materials, certain of our officers and other employees may, without compensation other than their regular compensation, solicit proxies through further mailing or personal conversations, or by telephone, facsimile or other electronic means. We will also, upon request, reimburse brokers and other persons holding stock in their names, or in the names of nominees, for their reasonable out-of-pocket expenses for forwarding proxy materials to the beneficial owners of our stock and to obtain proxies. In addition, we have retained MacKenzie Partners, Inc. as a proxy solicitor to solicit proxies for the Special Meeting and provide related advice and information support, for a service fee of $20,000 and the reimbursement of customary disbursements.

What does it mean if I receive more than one set of Proxy Materials?

If you receive more than one set of Proxy Materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy card in the Proxy Materials to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count votes "For," "Against," abstentions and broker non-votes for each of the five proposals presented at the Special Meeting.

For each of the proposals presented at the Special Meeting, only "For" and "Against" votes will be counted. Abstentions and broker non-votes will have no effect and will not be counted as votes cast for purposes of determining whether any such proposal has been approved. What are "broker non-votes"?

As discussed above, when a beneficial owner of shares held in "street name" does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed by the NYSE to be "non-routine," the broker or nominee cannot vote the shares. These unvoted shares are counted as "broker non-votes."

How many votes are needed to approve each proposal?

The following table summarizes the minimum vote needed to approve each proposal and the effect of abstentions and broker non-votes.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum is present if stockholders holding at least one-third of the voting power of all outstanding shares of capital stock entitled to vote at the Special Meeting are present at the Special Meeting virtually or represented by proxy. On the record date, there were     shares outstanding and entitled to vote. Thus, the holders of     shares must be present virtually or represented by proxy at the Special Meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote online at the meeting. Abstentions will be counted towards the quorum requirement. If there is no quorum, the chair of the Special Meeting may adjourn the meeting to another date.

How can I find out the results of the voting at the Special Meeting?

Preliminary voting results will be announced at the Special Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the Special Meeting.

What proxy materials are available on the internet?

The Proxy Statement and the proxy card will be available at www.proxyvote.com.

CAUTIONARY INFORMATION REGARDING FORWARD LOOKING STATEMENTS

All statements other than statements of historical fact included in this Proxy Statement including, without limitation, statements regarding our business strategy and the plans and objectives of management for future operations, are forward-looking statements. When used in this Proxy Statement, words and phrases such as "aim," "anticipate," "assume," "believe," "can," "continue," "could," "designed to," "estimate," "evaluate," "expect," "explore," "intend," "intended to," "likely," "may," "might," "objective," "ongoing," "plan," "potential," "predict," "project," "pursue," "seek," "should," "to be," "will," and "would," or the negative of such terms or other similar expressions, as they relate to us or our management, identify forward-looking statements. Any statements in this Proxy Statement about our expectations, beliefs, plans, objectives, assumptions or future events or performance are not historical facts and are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.

These forward-looking statements include statements regarding: our expectations for the Board, management team, Company name and ticker if the Required Company Stockholder Matters and Nasdaq Listing Application are approved; our ability to comply with Nasdaq's continued listing standards or to meet Nasdaq's initial listing standards; the Company's ability to realize the anticipated benefits of the Merger Transactions; the potential benefits of VT-7208; the expected use of proceeds from the 2026 Private Placement; and clinical milestones for VT-7208, including the expected timing for data readouts from ongoing clinical studies.

These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to revise any forward-looking statements to reflect events or developments occurring after the date of this Proxy Statement, even if new information becomes available in the future. You should refer to the Risk Factors section of this Proxy Statement and of our Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements.

DESCRIPTION OF THE TRANSACTIONS

Merger with Vidya

In the ordinary course of business, the Board regularly reviewed the strategy, prospects and financial condition of the Company, including opportunities and risks associated with the Company's product candidates and strategic alternatives potentially available to the Company. Beginning in June 2025, in light of challenging conditions in the biotechnology capital markets and the Company's declining cash balance, the Board, together with the Company's management, Foley & Lardner LLP ("Foley"), our outside legal counsel and several financial advisors began to evaluate the strategic alternatives available to the Company, aimed at maximizing stockholder value, including a potential sale, business combination or liquidation, as well as licensing and other business development opportunities related to its lead product, PCS6422. In May 2026, we engaged Katten Muchin Rosemann LLP ("Katten") as our Company's transaction legal counsel, and Tungsten, the as the Company's financial advisor, and began to evaluate additional strategic alternatives available to the Company. Over the course of the following two months, Tungsten and the Company's management team and Board reviewed several potential reverse merger candidate transaction proposals. The Company's management and banking partners also conducted extensive investor outreach in an effort to obtain financing, which was not able to be raised on acceptable terms. The Board considered the terms of the transaction proposals, including the relative valuation of the Company under each proposal, dilution of existing stockholders, likelihood of success, potential concurrent financing opportunities, the highly dilutive terms of the financing options that may have been available to the Company without a transaction and the likelihood of raising sufficient capital to make progress in our clinical programs.

Following Tungsten's outreach process and the Board's review of strategic alternatives available to the Company, including acquisition, licensing, wind-down and reverse merger alternatives, the Company focused its efforts on Vidya as a potential business combination partner. The Board determined that Vidya merited serious consideration based on the development status of Vidya's lead program, VT-7208, next-generation, CNS-penetrant, once-daily, oral potentially best-in-class Bruton's tyrosine kinase inhibitor ("BTKi") designed to overcome the efficacy and safety limitations of early-generation BTKi programs, including oral capsules or tablets, including results from its Phase 1 clinical trial of VT-7208, interest in Vidya from a broad syndicate of investors for up to $200 million in upfront financing, the superior valuation of the Company under the Vidya proposal compared to other proposals received, and the accelerated timeline to closing compared to other proposals.

Beginning on May 28, 2026 and continuing through July 27, 2026, representatives of the Company's management, Foley, Katten, Tungsten, Vidya's management, Cooley LLP, Vidya's legal counsel, and Leerink Partners LLC, Vidya's financial advisor, conducted business, financial, legal, tax, intellectual property and other due diligence with respect to the Company, Vidya and the potential transaction.

On July 28, 2026, the Company completed its merger with Vidya pursuant to the Merger Agreement, pursuant to which Merger Sub I merged with and into Vidya, with Vidya surviving and becoming a wholly owned subsidiary of the Company, and, immediately following the First Merger, Vidya merged with and into Merger Sub II, pursuant to which Merger Sub II was the surviving entity. The simultaneous sign-and-close structure of the Merger, combined with the 2026 Private Placement, preserved cash that would otherwise have been spent during a more extended closing process and enabled the financing to close more quickly and with greater certainty.]

The Merger was structured as a stock-for-stock transaction pursuant to which all of Vidya's outstanding equity interests were exchanged based on a fixed exchange ratio for aggregate consideration of 142,254.972 shares of Series A Preferred Stock, each share of which is convertible into 1,000 shares of common stock (representing 142,254,972 shares of common stock on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations), subject to certain conditions described below under Proposal No. 1. In addition, all outstanding options to purchase Vidya common stock were assumed by the Company and converted into options to purchase an aggregate of 1,047,524 shares of common stock. The Series A Preferred Stock was a newly designated series of preferred stock with no voting rights. The rights of the Series A Preferred Stock are set forth in the Certificate of Designation of Series A Non-Voting Convertible Preferred Stock (the "Certificate of Designation") that we filed with the Secretary of State of the State of Delaware. Please see "Description of Series A Preferred Stock" under Proposal No. 1 for a complete description of the Certificate of Designation and the rights of the Series A Preferred Stock. The Merger Transactions were approved by the Board, as well as the board of directors and stockholders of Vidya.

In connection with the execution of the Merger Agreement, the Company and Vidya entered into Support Agreements with all of our officers and directors (solely in their capacity as stockholders), representing approximately    % of shares of common stock outstanding on the record date. The Support Agreements provide that, among

other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of Common Stock beneficially owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements. The Merger has already been consummated, and stockholder approval of the Merger or the Merger Agreement is not being sought at this Special Meeting.

On July 27, 2026, the Company entered into the Tungsten Engagement Letter with Tungsten and Finalis, pursuant to which Tungsten and Finalis provided financial advisory services to the Company in connection with the Merger. The Tungsten Engagement Letter provided for an advisory fee, a transaction success fee upon the closing of the Merger and the reimbursement of certain expenses, which were satisfied by the issuance of an aggregate of 544.551 shares of Series A Preferred Stock to service providers of Tungsten and to Finalis.

2026 Private Placement

Concurrently with the Merger, we entered into the Purchase Agreement with the Investors with respect to the 2026 Private Placement, pursuant to which, on July 30, 2026, the Company issued and sold an aggregate of 163,774.679 shares of Series A Preferred Stock, each share of which is convertible into 1,000 shares of common stock (representing 163,774,679 shares of common stock on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations), subject to certain conditions described below under Proposal No. 1, at a price of $1,221.19 per share of Series A Preferred Stock for aggregate gross proceeds of approximately $200 million.

On July 28, 2026, we entered into a Registration Rights Agreement (the "RRA") with the Investors. Pursuant to the RRA, we are obligated to prepare and file a resale registration statement with the SEC within 75 calendar days following the closing of the 2026 Private Placement. The RRA also contains customary terms, including an obligation to indemnify the Investors and certain affiliates from certain liabilities relating to any misstatements or omissions in the resale registration statement.

As a result of the transactions, immediately following the PIPE Closing, equityholders of the Company immediately prior to the Merger owned approximately 1.4% of the common stock, equityholders of Vidya immediately prior to the Merger owned approximately 46% of the common stock and the Investors in the 2026 Private Placement owned approximately 52.6% of the common stock, in each case, calculated on a fully-diluted, as-converted-to-common basis (and without giving effect to any beneficial ownership limitations) and based on the implied equity values of the Company and Vidya.

Under the terms of the Merger Agreement and the Purchase Agreement, we are required to call and hold a meeting of our stockholders, as promptly as practicable following the date of the Merger Agreement and pursuant to the Nasdaq Stock Market Rules, to obtain the requisite approval from our legacy stockholders for Proposals Nos. 1 through 5.

On July 29, 2026, the Company publicly announced the Merger Transactions and filed a Current Report on Form 8-K attaching the Merger Agreement and related transaction documents. In that announcement, the Company stated that the Company expected to use the proceeds of the 2026 Private Placement to support the advancement of VT-7208 through multiple clinical milestones, including data from a Phase 2 proof-of-concept study in food allergy anticipated in the second half of 2027, data from a Phase 2 proof-of-concept study in chronic spontaneous urticaria anticipated in the first half of 2028, and data from a Phase 2 proof-of-concept study in relapsing multiple sclerosis anticipated in the second half of 2028.

The foregoing summary of the terms of the Merger Agreement, the Certificate of Designation, the Purchase Agreement and the RRA are not complete and are qualified in their entirety by the provisions of the Merger Agreement, the Certificate of Designation, the form of Purchase Agreement and the form of RRA, which are filed as Exhibits 2.1, 3.1, 10.1 and 10.2, respectively, to our Current Report on Form 8-K, filed with the SEC on July 29, 2026.

Accounting Treatment

The Merger has been accounted for as an asset acquisition under U.S. GAAP, with the Company determined to be the accounting acquirer. The Company evaluated whether the acquired set constituted a business under ASC Topic 805, Business Combinations. The Company determined that substantially all (greater than 90%) of the fair value of the gross assets acquired was concentrated in VT-7208, a BTK inhibitor therapy for immune-mediated diseases. Accordingly, the acquired set did not meet the definition of a business and the Merger was accounted for as an asset acquisition. The acquired in-process research and development related to VT-7208 had no alternative future use and was therefore expensed as of the acquisition date. No goodwill was recognized as part of the Merger.

See the "Unaudited Pro Forma Condensed Combined Financial Information" included as Annex A to this Proxy Statement for additional information.

RISK FACTORS

You should carefully consider the risks described below, together with all of the other information contained in this Proxy Statement (including the unaudited pro forma financial information included elsewhere in this Proxy Statement), in deciding how to vote on matters being considered at the Special Meeting. In addition, for a discussion of risks relating to our business, financial condition, results of operations and industry generally, you should review the risk factors described under the caption "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on March 18, 2026 and in Exhibit 99.4 to our Current Report on Form 8-K/A, filed with the SEC on October 5, 2026, as such risk factors may be updated from time to time in our subsequent reports filed with the SEC.

Pursuant to the terms of the Merger, we are required to recommend that our stockholders approve the Required Company Stockholder Matters. We cannot guarantee that our stockholders will approve these matters, and if they fail to do so we may be required to settle all outstanding shares of our Series A Preferred Stock in cash and our operations may be materially harmed.

Under the terms of the Merger Agreement and the Purchase Agreement, as promptly as practicable following the date of the Merger Agreement and pursuant to the Nasdaq Stock Market Rules, we are required to call and hold a meeting of our stockholders to obtain the requisite approval from our legacy stockholders for, among other things, (i) the Conversion Proposal, (ii) the Minimum Price Proposal, (iii) the 2027 Plan Proposal and (iv) the 2027 ESPP Proposal. If we fail to receive sufficient proxies to constitute a quorum or to obtain the required vote on the Required Company Stockholder Matters (Proposals No. 1 through No. 4 herein) or we are otherwise required by Nasdaq Listing Rules, we would be required to adjourn or postpone the Special Meeting one or more times for up to 30 days per adjournment or postponement. If stockholder approval of the Required Company Stockholder Matters is still not obtained following such adjournment(s) or postponement(s), we will be obligated to continue soliciting stockholder approval at subsequent annual or special meetings of our stockholders, held at intervals of at least every six months, until such approvals are obtained, which would be time consuming and costly.

There can be no assurance that our legacy stockholders will approve the Required Company Stockholder Matters. Additionally, if the Conversion Proposal is not approved by the date that is nine months following the initial issuance date of the Series A Preferred Stock, the holders of the Series A Preferred Stock would be entitled to require us to settle their shares of our common stock underlying the Series A Preferred Stock for cash at a price per share equal to the fair value of our common stock at such time as described in the Certificate of Designation, provided that the Company has funds legally available for such payment. If we are forced to cash settle a significant amount of the shares of our common stock underlying the Series A Preferred Stock, it could materially affect our results of operations, business and financial condition.

Failure to obtain approval of the Nasdaq Listing Application, if required, could materially affect our results of operations, business and financial condition.

Pursuant to the Merger Agreement, we are required to use our reasonable best efforts to file the Nasdaq Listing Application to the extent required by the Nasdaq Listing Rules and to cause such Nasdaq Listing Application to be conditionally approved prior to the date of our stockholder meeting to approve the Required Company Stockholder Matters. Approval of a Nasdaq Listing Application may be required if Nasdaq determines there is a "change of control" under Nasdaq Listing Rule 5110(a). If we fail to meet the Nasdaq initial listing requirements and Nasdaq does not approve the Nasdaq Listing Application if and when required, we may be required to adjourn or postpone our stockholder meeting to approve the Required Company Stockholder Matters one or more times for up to 30 days per adjournment, continue to use our reasonable best efforts to obtain approval of the Nasdaq Listing Application and to continue soliciting stockholder approval of the Required Company Stockholder Matters at subsequent annual or special meetings of our stockholders, held at intervals of at least every six months, until such approval and the approval of the Required Company Stockholder Matters are obtained, which would be time consuming and costly. Additionally, if the Conversion Proposal is not approved by the date that is nine months following the initial issuance date of the Series A Preferred Stock, the holders of the Series A Preferred Stock would be entitled to require us to settle their shares of Series A Preferred Stock for cash at a price per share equal to the fair value of the Series A Preferred Stock at such time as described in the Certificate of Designation, provided that the Company has funds legally available for such payment. If we are forced to cash settle a significant amount of the shares of our common stock underlying the Series A Preferred Stock, it could materially affect our results of operations, business and financial condition. We cannot assure you that we will be able to meet Nasdaq's initial listing standards if required. Furthermore, if we fail to obtain approval of the Nasdaq Listing Application to the extent required, we may be unable to execute on our plans for the Company following the Merger, which could materially affect our results of operations, business and financial condition.

The unaudited pro forma condensed combined financial statements included in this Proxy Statement are presented for illustrative purposes only and may not be an indication of our financial condition or results of operations following the completion of the Merger.

The unaudited pro forma condensed combined financial statements contained in this Proxy Statement as Annex A are presented for illustrative purposes only and may not be an indication of our financial condition or results of operations following the Merger for several reasons. The unaudited pro forma condensed combined financial statements have been derived from the historical audited financial statements of the Company and Vidya for the year ended December 31, 2025 and as of and for the six months ended June 30, 2026 and certain adjustments and assumptions have been made regarding the Company after giving effect to the Merger. The information upon which these adjustments and assumptions have been made is preliminary, and these kinds of adjustments and assumptions are difficult to make with accuracy. Moreover, the unaudited pro forma condensed combined financial statements do not reflect all costs that are expected to be incurred by us in connection with the Merger. For example, the impact of any incremental costs incurred in integrating the two companies is not reflected in the unaudited pro forma condensed combined financial statements. As a result, the actual financial condition of the combined company following the Merger may not be consistent with, or evident from, these unaudited pro forma condensed combined financial statements. The assumptions used in preparing the unaudited pro forma condensed combined financial statements may not prove to be accurate, and other factors may affect our financial condition following the Merger. For more information, please see Annex A.

PROPOSAL NO. 1

 

APPROVAL OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES A PREFERRED STOCK AND EXERCISE OF THE VIDYA OPTIONS, WHICH (A) WILL REPRESENT MORE THAN 20% OF THE SHARES OF COMMON STOCK OUTSTANDING PURSUANT TO NASDAQ LISTING RULE 5635(A) AND (B) MAY, TOGETHER WITH CERTAIN CHANGES TO MANAGEMENT AND OUR BOARD, RESULT IN THE CHANGE OF CONTROL OF THE COMPANY PURSUANT TO NASDAQ LISTING RULE 5635(B)

Overview

As described above, we issued (i) in the Merger, an aggregate of 142,254.972 shares of Series A Preferred Stock (representing 142,254,972 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations), (ii) in the 2026 Private Placement, an aggregate of 163,774.679 shares of Series A Preferred Stock (representing 163,774,679 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations) and (iii) pursuant to the Tungsten Engagement Letter, an aggregate of 544.551 shares of Series A Preferred Stock (representing 544,551 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations). In addition, in the Merger, we assumed the Vidya Options, which will become exercisable for up to an aggregate of 1,047,524 shares of common stock upon approval of the Required Company Stockholder Matters.

The Series A Preferred Stock is intended to have rights that are generally equivalent to our common stock, provided that the Series A Preferred Stock does not have the right to vote on most matters (including the election of directors or any proposals herein) and the Series A Preferred Stock ranks senior to the common stock solely to the extent of a liquidation preference in amount equal to $0.0001 per share (the "Series A Non-Voting Liquidation Amount") upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a "Liquidation"). The shares of Series A Preferred Stock will automatically convert into an aggregate of 306,574,202 shares of common stock upon the third business day following receipt of approval of the Conversion Proposal in accordance with Nasdaq listing rules up to the beneficial ownership limitations set by each holder.

Nasdaq Listing Rule 5110 may require that the Company submit, and Nasdaq approve, the Nasdaq Listing Application prior to there being a "change of control." The approval being sought in this Proposal No. 1, along with the filing of the Nasdaq Listing Application with Nasdaq, to the extent required, is intended to satisfy this obligation of the Company. If we do not submit the Nasdaq Listing Application, or such application is not approved, the Company will be prohibited from taking any actions, that together with the conversion of the Series A Preferred Stock, would constitute a "change of control" under Nasdaq Listing Rule 5110 until such time as such Nasdaq Listing Application is approved.

With respect to the Nasdaq Listing Application and compliance with the initial listing standards of Nasdaq, Annex A of this Proxy Statement sets forth certain unaudited pro forma financial information for the Company for the year ended December 31, 2025 and as of and for the six months ended June 30, 2026, after giving effect to the entrance into the Merger Transactions.

Shares Issuable Upon Conversion and Exercise

Set forth below is a table summarizing the issued and outstanding shares of Series A Preferred Stock, Vidya Options, and the number of shares of common stock that are potentially issuable upon conversion of the Series A Preferred Stock and exercise of the Vidya Options. The sale into the public market of the underlying common stock could materially and adversely affect the market price of our common stock.

Description of Series A Preferred Stock

The following summary of the terms of the Series A Preferred Stock is not complete and is qualified in its entirety by the provisions of the Certificate of Designation, which is filed as Exhibit 3.1 to our Current Report on Form 8-K, filed with the SEC on July 29, 2026.

Conversion. Following stockholder approval of the Conversion Proposal, effective as of 5:00 p.m. (Eastern time) on the third business day after the date on which such stockholder approval is received, each outstanding share of Series A Preferred Stock will automatically convert into 1,000 shares of common stock (the "Automatic Conversion"), subject to certain beneficial ownership limitations, including that a holder of Series A Preferred Stock is prohibited from converting shares of Series A Preferred Stock into shares of common stock if, as a result of such conversion, such holder, together with its affiliates, would beneficially own more than a specified percentage (initially set by the holder to a number between 4.9% and 19.99% and thereafter adjusted) of the total number of shares of common stock issued and outstanding immediately after giving effect to such conversion. If any shares of Series A Preferred Stock continue to be outstanding following such automatic conversion due to the application of beneficial ownership limitations, such shares of Series A Preferred Stock will be convertible at the option of the holder, subject to such beneficial ownership limitations. In addition, from time to time following such automatic conversion, but in no event more than once in every six-month period, the Company may elect to effect additional automatic conversions, subject to the beneficial ownership limitations set by each holder.

Voting Rights. Except as otherwise required by the Certificate of Designation or the General Corporation Law of the State of Delaware ("DGCL"), the Series A Preferred Stock does not have voting rights. However, as long as any shares of Series A Preferred Stock are outstanding, we will not, without the affirmative vote of the holders of a majority of the then outstanding shares of the Series A Preferred Stock, (i) alter or change adversely the powers, preferences or rights given to the Series A Preferred Stock or alter or amend the Certificate of Designation, amend or repeal any provision of, or add any provision to, the Company's fourth amended and restated certificate of incorporation, as amended ("Certificate of Incorporation"), or the amended and restated bylaws of the Company ("Amended and Restated Bylaws"), or file any certificate of amendment, certificate of designations, preferences, limitations and relative rights of any series of preferred stock, in each case, if such action would adversely alter or change the preferences, rights, privileges or powers of, or restrictions provided for the benefit of the Series A Preferred Stock relative to the common stock, regardless of whether any of the foregoing actions shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation, recapitalization, reclassification, conversion or otherwise, (ii) issue additional shares of Series A Preferred Stock or increase or decrease (other than by conversion) the number of authorized shares of Series A Preferred Stock, (iii) prior to the Automatic Conversion, consummate either: (A) any Fundamental Transaction (as defined in the Certificate of Designation) or (B) any merger or consolidation of the Company with or into another person or any stock sale to, or other business combination (including, without limitation, a reorganization, recapitalization, spin-off, share exchange or scheme of arrangement) with or into, another person in which the stockholders of the Company immediately before such transaction do not hold at least a majority of the voting power of the capital stock of the Company or surviving corporation or the parent entity of the Company or surviving corporation immediately after such transaction or in which the Company or the surviving corporation issues securities in such transaction that represent, or are convertible into securities representing, more than a majority of the voting power of the Company immediately before such transaction (a "Change of Control Transaction"), (iv) prior to the Automatic Conversion, authorize or issue any class or series of stock that has powers, preferences or rights that are senior to those of the Series A Preferred Stock, (v) amend, waive or modify the Merger Agreement in any manner that would be reasonably likely to prevent, impede or materially delay the stockholder approval of the Conversion Proposal or the Automatic Conversion or (vi) enter into any agreement with respect to any of the foregoing.

Cash Settlement. If, at any time after the date that is nine months after the initial issuance of the Series A Preferred Stock, the Company fails to deliver or cause to be delivered to the holder of shares of Series A Preferred Stock certificates or statements representing shares of common stock, or electronically deliver (or cause its transfer agent to electronically deliver) such shares, on or prior to Share Delivery Deadline (as defined in the Certificate of Designation), subject to certain limited exceptions, the Company shall, at the request of the holder of the shares of Series A Preferred Stock, pay an amount in cash by wire transfer of immediately available funds equal to the Fair Value (as defined below) of such undelivered shares, with such payment to be made within two business days from the date of request by such holder, whereupon the Company's obligations to deliver such shares underlying the Notice of Conversion (as defined in the Certificate of Designation) shall be extinguished upon payment in full of the Fair Value of such undelivered shares. Except for limited circumstances set forth in the Certificate of Designation, the cash settlement provisions set forth in the Certificate of Designation shall be available irrespective of the reason for the Company's failure to timely

deliver the applicable shares of common stock including due to the lack of obtaining the approval of the Conversion Proposal. The "Fair Value" of shares shall be the average of the Closing Sale Prices (as defined in the Certificate of Designation) for the common stock on the 10 Trading Days (as defined in the Certificate of Designation) immediately prior to the conversion date applicable to the Notice of Conversion in respect of which such cash payment is being made.

Dividends. Holders of Series A Preferred Stock are entitled to receive dividends on shares of Series A Preferred Stock equal, on an as-if-converted-to-common stock basis, and in the same form as dividends actually paid on shares of our common stock.

Liquidation and Dissolution. The Series A Preferred Stock ranks senior to our common stock to the extent of the Series A Non-Voting Liquidation Amount and (ii) on parity with our common stock in all other respects, in each case as to dividends or distributions or assets upon any Liquidation. Upon any Liquidation, each holder of Series A Preferred Stock shall be entitled to receive, prior and in preference to any distribution to the holders of common stock, out of the assets of the Company, whether capital or surplus, an amount per share equal to the Series A Non-Voting Liqidation Amount, plus an amount equal to any dividends declared but unpaid to such shares. Thereafter, the remaining assets of the Company shall be distributed pari passu with all holders of common stock.

Description of Vidya Options

The following summary of the assumption and conversion of the Vidya Options is not complete and is qualified in its entirety by the provisions of the Merger Agreement, which is filed as Exhibit 2.1 to our Current Report on Form 8-K, filed with the SEC on July 29, 2026.

In accordance with the Merger Agreement, at the effective time of the First Merger (the "First Effective Time"), each Vidya Option that was outstanding and unexercised was assumed by us and converted into an option to purchase common stock with (i) the number of shares underlying such option determined by multiplying (a) the number of shares of Vidya common stock that were subject to the corresponding Vidya Option, as in effect immediately prior to the First Effective Time, by (b) the Exchange Ratio (as defined in the Merger Agreement), and rounding the resulting number down to the nearest whole number of shares of common stock, and (ii) the per share exercise price for the common stock issuable upon exercise of each Vidya Option was determined by dividing (a) the per share exercise price of Vidya common stock subject to the corresponding Vidya Option, as in effect immediately prior to the First Effective Time, by (b) the Exchange Ratio and rounding the resulting exercise price up to the nearest whole cent.

Following our assumption of the Vidya Options, the terms thereof (including, but not limited to, the expiration date, restrictions on exercisability, and vesting schedule) otherwise remained unchanged; provided, that, (i) in the case of any Vidya Option that was subject to Section 421 of the United States Internal Revenue Code of 1986, as amended (the "Code") as of the First Effective Time by reason of its qualification under Section 422 of the Code, the per share exercise price, the number of shares of common stock subject to such Vidya Option and the terms and conditions of such Vidya Option were determined in a manner consistent with the requirements of Section 424(a) of the Code; and (ii) the exercise price, the number of shares of common stock subject to, and the terms and conditions of exercise of each Vidya Option were also determined in a manner consistent with the requirements of Section 409A of the Code; provided, further, that: (a) no Vidya Option is exercisable until the date on which the Required Company Stockholder Matters are approved; (b) the terms of the Vidya Options were further amended, as needed, to reflect such assumption by us (including that any change in control or similar definition relate to us instead of Vidya and any provision that provides for the adjustment of the Vidya Options upon the occurrence of certain corporate events of Vidya relate to similar corporate events of us instead); and (c) our Board or a committee thereof succeeded to the authority and responsibility of the Vidya board of directors or any committee thereof with respect to each Vidya Option.

Executive Officers and Directors Following the Special Meeting

If the Required Company Stockholder Matters and the Nasdaq Listing Application are approved, we plan to make certain changes to our Board and management team that would exceed 20% of the then-serving directors and management team immediately prior to the Merger. We are currently actively recruiting candidates to serve on our management team and Board and intend to supplement this proxy statement and file a Current Report on Form 8-K in connection with any such appointments or nominations. If following the approval of the Required Company Stockholder Matters and the Nasdaq Listing Application, we have not appointed any new members to our management team and/or Board, we expect that the existing management team and Board will continue to serve in their capacities until such candidates have been identified.

Reasons for Stockholder Approval

Our common stock is listed on the Nasdaq Capital Market, and, as such, we are subject to the applicable rules of the Nasdaq Stock Market LLC, including Nasdaq Listing Rule 5635(a), which requires stockholder approval in connection with the acquisition of another company if the Nasdaq-listed company will issue more than 20% of its common stock. For purposes of Nasdaq Listing Rule 5635(a), the issuance of any common stock in the Merger Transactions would be aggregated together. If all shares of Series A Preferred Stock are converted into shares of our common stock (without giving effect to any beneficial ownership limitations), the shares of common stock issued upon such conversion and the shares of common stock issuable upon exercise of the Vidya Options, would constitute approximately     % of our issued and outstanding stock as of the record date. Thus, in order to permit the issuance of common stock upon conversion of the Series A Preferred Stock and exercise of the Vidya Options, we must first obtain stockholder approval of this issuance.

In addition, pursuant to Nasdaq Listing Rule 5635(b), stockholder approval is required prior to the issuance of securities that will result in a "change of control" of a listing company. Nasdaq has not formally defined what constitutes a "change of control" but Nasdaq guidance provides that generally a change of control occurs when, as a result of the issuance of securities in such transaction, an investor or a group of investors would own, or have the right to acquire, 20% or more of the outstanding shares of common stock or voting power and such ownership or voting power would be the largest ownership position. In addition, Nasdaq will consider all facts and circumstances concerning a transaction, including whether there are any other relationships or agreements between a company and an investor. Additionally, under Nasdaq Listing Rule 5110(a), Nasdaq guidance suggests that a change of control could result based on changes to the voting power and/or share ownership, management and board of directors of the listed company. Although the conversion of the Series A Preferred Stock will not result in an investor beneficially owning more than 20% of our voting power due to the beneficial ownership blockers and upon the closing of the Merger Dr. Sheila Gujrathi was the only newly appointed director of the Company, any subsequent changes to the Board and management of the Company, even if occurring after the closing of the Merger Transactions and even if such changes are not a result of any contractual rights of any investor or group of investors, may be deemed a "change of control" by Nasdaq. Because we desire to make changes to our Board and management team after the Special Meeting as noted above, we are seeking stockholder approval of a "change of control" under Nasdaq Listing Rules. In addition, we plan to file the Nasdaq Listing Application in connection with such "change of control." Stockholders should note that a "change of control" as described under Nasdaq Listing Rule 5635(b) applies only with respect to the application of such rule and does not constitute a "change of control" for purposes of Delaware law, our organizational documents or any other purpose.

Effect of Proposal No. 1

In the event that our stockholders approve this Proposal No. 1 (i) the Series A Preferred Stock will become immediately convertible into shares of common stock, subject to any beneficial ownership limitations set by the holder; and (ii) the restrictions prohibiting the Vidya Options from being exercisable will be lifted. In addition, if this Proposal No. 1 and Proposals No. 2, 3 and 4 are also approved at the Special Meeting and the Nasdaq Listing Application is approved we will be able to make changes to our management team and Board as described below under "Executive Officers and Directors Following the Special Meeting". The issuance of our shares of common stock upon the conversion of the Series A Preferred Stock or exercise of the Vidya Options, as applicable, will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares of common stock owned by our existing stockholders will represent a substantially smaller percentage of our total outstanding shares of common stock after any such conversion or exercise.

In the event that our stockholders do not approve this Proposal No. 1 at the Special Meeting, the Series A Preferred Stock will not become convertible, and the Vidya Options will not become exercisable for common stock, as applicable, unless and until stockholders approve of such conversion and exercise and issuance of shares of common stock for the purposes of complying with the applicable provisions of Nasdaq Listing Rule 5635. Pursuant to the Merger Agreement and the Purchase Agreement, if we fail to receive sufficient proxies to constitute a quorum or to obtain the required vote on this Proposal No. 1, we would be required to postpone or adjourn the Special Meeting one or more times for up to 30 days per postponement or adjournment. Further, in the event that our stockholders do not approve this Proposal No. 1 at the Special Meeting, we are required to use our reasonable best efforts to secure the approvals sought in this Proposal No. 1 as soon as practicable following the date of the Special Meeting. We will be required to hold an annual meeting or a special meeting at least every six months to solicit and take a vote on the approvals sought in this Proposal No. 1

until such approvals are obtained. The process of continuing to hold stockholder meetings to obtain such approvals would cause us to incur significant legal expenses and could divert our management's attention from the operation of our business. In addition, if we are unable to obtain approval of the Conversion Proposal before the date that is nine months after the initial issuance of the Series A Preferred Stock, we may be required to make significant cash settlement payments to the holders of Series A Preferred Stock.

Interests of Certain Parties

In connection with the Merger Transactions, Sheila Gujrathi, M.D., was appointed as a member of our Board. Dr. Gujrathi also holds 70,811.877 shares of Series A Preferred Stock (representing 70,811,877 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations) and has an indirect pecuniary interest in 12,311.279 shares of Series A Preferred Stock held by SilverArc Private Fund I, L.P. (representing 12,311,279 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations) where she serves as a Co-Portfolio Manager and has a membership interest in the ultimate general partner of SilverArc Private Fund I, L.P., and, in each case, such shares of Series A Preferred Stock will become convertible into common stock in accordance with the Certificate of Designation if this Proposal No.1 is approved. Further, in connection with the execution of the Merger Agreement, the Company and Vidya entered into Support Agreements with all of our officers and directors (solely in their capacity as stockholders), representing approximately  % of shares of common stock outstanding on the record date. The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of common stock beneficially owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements.

THE BOARD OF DIRECTORS RECOMMENDS

 

A VOTE "FOR" PROPOSAL NO. 1.

PROPOSAL NO. 2

 

APPROVAL OF ISSUANCE OF SHARES OF OUR COMMON STOCK UPON CONVERSION OF THE PIPE PREFERRED SHARES PURSUANT TO NASDAQ LISTING RULE 5635(D)

Overview

As described above, in the 2026 Private Placement, we issued an aggregate of 163,774.679 shares of Series A Preferred Stock (representing 163,774,679 shares of common stock on an as-converted-to-common basis, without giving effect to any beneficial ownership limitations).

Shares Issuable Upon Conversion

Set forth below is a table summarizing the issued and outstanding shares of Series A Preferred Stock and the number of shares of common stock that are potentially issuable upon conversion of the Series A Preferred Stock. The sale into the public market of the underlying common stock could materially and adversely affect the market price of our common stock.

Description of Series A Preferred Stock

See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)" for a description of the Series A Preferred Stock.

Reasons for Stockholder Approval

Our common stock is listed on the Nasdaq Capital Market, and, as such, we are subject to the applicable rules of the Nasdaq Stock Market LLC, including Nasdaq Listing Rule 5635(d), which requires stockholder approval prior to the sale, issuance, or potential issuance by a listed company, in a transaction other than a public offering, of shares of common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock outstanding or 20% or more of the voting power outstanding before the issuance for a price that is less than the lower of (i) the company's Nasdaq Official Closing Price (as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement, or (ii) the average of the company's Nasdaq Official Closing Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement (the "Minimum Price").

As discussed above, on July 28, 2026 (the "Execution Date"), we entered into the Purchase Agreement with the Investors, pursuant to which, on July 30, 2026, we issued and sold the PIPE Preferred Shares at a price of $1,221.19 per share of Series A Preferred Stock. Accordingly, the deemed price at which each share of Series A Preferred Stock shall convert into a share of our common stock is approximately $1.22119. The closing price of our common stock on July 27, 2026, the trading date immediately preceding the signing of the Purchase Agreement, was $2.59, and the average closing price of our common stock for the five trading days immediately preceding the signing of the Purchase Agreement was $2.568. As a result, it is possible that we may issue shares of our common stock upon conversion of the shares of Series A Preferred Stock at a price below the Minimum Price in the future. In addition, if all of the PIPE Preferred Shares are converted into shares of our common stock (without giving effect to any beneficial ownership limitations), the shares of common stock issued upon such conversion would constitute approximately     % of our issued and outstanding stock as of the record date. Thus, in order to permit the issuance of common stock upon conversion of the PIPE Preferred Shares, we must first obtain stockholder approval of this issuance.

Accordingly, we are seeking stockholder approval of this Proposal No. 2 in order to permit us to issue shares of common stock upon conversion of the PIPE Preferred Shares at a price below the Minimum Price.

Effect of Proposal No. 2

In the event that our stockholders approve this Proposal No. 2, and Proposal Nos. 1, 3 and 4 are also approved, at the Special Meeting, each of the effects that are contingent upon approval of the Required Company Stockholder Matters will also occur. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Effect of Proposal No. 1" for more information. The issuance of our shares of common stock upon the conversion of the PIPE Preferred Shares will not affect the rights or privileges of our existing stockholders, except that the economic and voting interests of each of our existing stockholders will be diluted. Although the number of shares of common stock that our existing stockholders own will not decrease, the shares of common stock owned by our existing stockholders will represent a substantially smaller percentage of our total outstanding shares of common stock after any such conversion.

Pursuant to the Purchase Agreement, if we fail to receive sufficient proxies to constitute a quorum or to obtain the required vote on this Proposal No. 2, we would be required to postpone or adjourn the Special Meeting one or more times for up to 30 days per postponement or adjournment. Further, in the event that our stockholders do not approve this Proposal No. 2 at the Special Meeting, we are required to use our reasonable best efforts to secure the approvals sought in this Proposal No. 2 as soon as practicable following the date of the Special Meeting. We will be required to hold an annual meeting or a special meeting at least every six months to solicit and take a vote on the approvals sought in this Proposal No. 2 until such approvals are obtained. The process of continuing to hold stockholder meetings to obtain such approvals would cause us to incur significant legal expenses and could divert our management's attention from the operation of our business. In addition, if we are unable to obtain approval of the Conversion Proposal before the date that is nine months after the initial issuance of the Series A Preferred Stock as a result of successively postponing or adjourning the Special Meeting for failure to receive sufficient votes to approve the Required Company Stockholder Matters, including this Proposal No. 2, we may be required to make significant cash settlement payments to the holders of Series A Preferred Stock.

Interests of Certain Parties

Although none of our directors or executive officers purchased PIPE Preferred Shares in the 2026 Private Placement, certain directors and executive officers have certain interests in this Proposal No. 2 as a result of it being one of the proposals contained in the Required Company Stockholder Matters. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Interests of Certain Parties." for a description of such interests.

In addition, in connection with the execution of the Merger Agreement, the Company and Vidya entered into Support Agreements with all of our officers and directors (solely in their capacity as stockholders), representing approximately     % of shares of common stock outstanding on the record date. The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of common stock beneficially owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements.

THE BOARD OF DIRECTORS RECOMMENDS

 

A VOTE "FOR" PROPOSAL NO. 2.

PROPOSAL NO. 3

 

APPROVAL OF THE 2027 EQUITY INCENTIVE PLAN

Overview

The Company's stockholders are also being asked to consider and vote upon the 2027 Plan Proposal to approve the Company's 2026 Equity Incentive Plan (the "2027 Plan"). Our board of directors approved the 2027 Plan on September 30, 2026, subject to stockholder approval. If the Company's stockholders approve the 2027 Plan, the 2027 Plan will immediately become effective. If the 2027 Plan is not approved by the Company's stockholders, the 2027 Plan will not become effective. The 2027 Plan is described in more detail below.

The summary is qualified in its entirety by reference to the text of the 2027 Plan, a copy of which is attached as Annex B to this Proxy Statement. The Company's stockholders should refer to the 2027 Plan for a more complete and detailed information about the terms and conditions of the 2027 Plan.

We Manage Our Equity Award Use Carefully

We continue to believe that equity awards are a vital part of our overall compensation program. Our compensation philosophy reflects broad-based eligibility for equity awards, and we grant equity awards to substantially all of our employees. However, we recognize that equity awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our "burn rate," in a manner intended to maximize stockholders' value by granting the appropriate number of equity awards necessary to attract, reward, and retain employees.

Burn Rate

The following table provides detailed information regarding the activity related to the Company's equity incentive program for fiscal years 2025, 2024 and 2023 but does not include information regarding any equity incentive programs of Vidya.

Overhang

The following table provides certain information regarding the Company's equity incentive programs but does not include information on any equity incentive programs of Vidya.

2027 Equity Incentive Plan

The 2027 Plan will be the successor to and continuation of the Amended and Restated Processa Pharmaceuticals, Inc. 2011 Equity Incentive Plan, the Processa Pharmaceuticals, Inc. 2019 Omnibus Incentive Plan, the Amended and Restated Processa Pharmaceuticals, Inc. 2019 Omnibus Incentive Plan and the Vidya Therapeutics, Inc. 2025 Equity Incentive Plan (each as may be amended from time to time, collectively, the "Prior Plans"). Once the 2027 Plan becomes effective, no further grants will be made under the Prior Plans.

Eligibility. Any individual who is an employee of ours or any of our affiliates, or any person who provides services to us or our affiliates, including members of our board of directors, is eligible to receive awards under the 2027 Plan at the discretion of the plan administrator. As of September 30, 2026, we had ten employees, two consultants and five non-employee directors.

Types of Awards. The 2027 Plan provides for the grant of incentive stock options ("ISOs") to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options ("NSOs"), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of our affiliates.

Authorized Shares. Subject to adjustment for specified changes in our capitalization, the maximum number of shares of our common stock that will be available for issuance under the 2027 Plan will be equal to (i) 46,837,294 shares of common stock, plus up to (ii) 418,586 shares of our common stock subject to outstanding stock awards granted under the Prior Plans (including, but not limited to, outstanding stock awards assumed by the Company in connection with the Merger) that, after the date the 2027 Plan becomes effective, are not issued because a stock award expires or otherwise terminates without all of the shares covered by the award having been issued; are not issued because the stock award is settled in cash; are forfeited or repurchased because of the failure to vest; or are reacquired or withheld to satisfy a tax withholding obligation or the purchase or exercise price (the shares described in clause (ii), the "Returning Shares"). In addition, the number of shares of our common stock reserved for issuance under the 2027 Plan will automatically increase on January 1 of each calendar year, from January 1, 2028 through January 1, 2037, in an amount equal to 5% of the total number of Fully Diluted Shares (as defined in the 2027 Plan, which includes all shares of our common stock outstanding plus all shares issuable upon conversion or exercise of outstanding securities and rights, including preferred stock on an as-converted basis, equity awards, warrants (including pre-funded warrants), and any convertible indebtedness or similar instruments, whether or not then vested or currently exercisable) on December 31 of the preceding year, or a lesser number of shares determined by our board of directors. The maximum number of shares of our common stock that may be issued on the exercise of ISOs under the 2027 Plan is equal to 140,511,882 shares. As of     , 2026, the closing price of the Company's common stock as reported on Nasdaq was $     per share.

Shares subject to stock awards granted under the 2027 Plan that expire or terminate without being exercised in full, or that are paid out in cash rather than in shares, do not reduce the number of shares available for issuance under the 2027 Plan. Additionally, the following actions do not result in an issuance of shares under the 2027 Plan and accordingly do not reduce the number of shares available for issuance: (i) shares withheld by the Company to satisfy the exercise, strike or purchase price of a stock award; (ii) shares withheld by the Company to satisfy a tax withholding obligation in connection with a stock award; and (iii) shares that are forfeited back to or repurchased by the Company because of a failure to meet a contingency or condition required for the vesting of such shares.

Plan Administration. Our board of directors, or a duly authorized committee of our board of directors, will administer the 2027 Plan. Our board of directors may delegate concurrent authority to administer the 2027 Plan to our compensation committee under the terms of our compensation committee's charter. We sometimes refer to our board of directors, or the applicable committee with the power to administer our equity incentive plans, as the administrator. The administrator may also delegate to one or more persons or bodies the authority to (i) designate employees (other than officers) to receive specified awards, and (ii) determine the number of shares subject to such awards. Such persons or bodies may not grant a stock award to themselves and neither our board of directors nor any committee may delegate authority to any person or body (who is not a member of our board of directors or such body that is not comprised solely of members of our board of directors) the authority to determine the fair market value of our common stock for purposes of the 2027 Plan.

The administrator has the authority to determine the terms of awards, including recipients, the exercise, purchase or strike price of awards, if any, the number of shares subject to each award, the fair market value of a share of common stock, the vesting schedule applicable to the awards, together with any vesting acceleration, and the form of consideration, if any, payable upon exercise or settlement of the award and the terms of the award agreements for use under the 2027 Plan.

In addition, subject to the terms of the 2027 Plan, the administrator also has the power to modify outstanding awards under the 2027 Plan, including the authority to reprice any outstanding option or stock appreciation right, cancel and re-grant any outstanding option or stock appreciation right in exchange for new stock awards, cash or other consideration, or take any other action that is treated as a repricing under generally accepted accounting principles, with the consent of any materially adversely affected participant.

Stock Options. ISOs and NSOs are granted under applicable award agreements adopted by the administrator. The administrator determines the exercise price for stock options, within the terms and conditions of the 2027 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted under the 2027 Plan vest at the rate specified in the applicable award agreement as determined by the administrator.

Tax Limitations on ISOs. The aggregate fair market value, determined at the time of grant, of our common stock with respect to ISOs that are exercisable for the first time by an optionholder during any calendar year under all of our stock plans may not exceed $100,000, as provided under Section 422(d) of the Code. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (i) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant; and (ii) the option is not exercisable after the expiration of five years from the date of grant.

Restricted Stock Unit Awards. Restricted stock units are granted under the applicable award agreements adopted by the administrator. Restricted stock units may be granted in consideration for any form of legal consideration that may be acceptable to our board of directors and permissible under applicable law. A restricted stock unit may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the administrator, or in any other form of consideration set forth in the applicable award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit. Except as otherwise provided in the applicable award agreement, restricted stock units that have not vested will be forfeited once the participant's continuous service ends for any reason.

Restricted Stock Awards. Restricted stock awards are granted under applicable award agreements adopted by the administrator. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, past services to us, or any other form of legal consideration (including future services) that may be acceptable to our board of directors and permissible under applicable law. The administrator determines the terms and conditions of restricted stock awards, including vesting and forfeiture terms. If a participant's service relationship with us ends for any reason, we may receive any or all of the shares of our common stock held by the participant that have not vested as of the date the participant terminates service with us through a forfeiture condition or a repurchase right.

Stock Appreciation Rights. Stock appreciation rights are granted under applicable award agreements adopted by the administrator. The administrator determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under the 2027 Plan vests at the rate specified in the applicable award agreement as determined by the administrator.

Performance Awards. The 2027 Plan permits the grant of performance-based stock and cash awards. The administrator may structure awards so that the shares of our stock, cash, or other property will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period. The performance criteria that will be used to establish such performance goals may be based on any one of, or combination of, the following as determined by the administrator: earnings (including earnings per share and net earnings); earnings before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total stockholder return; relative stockholder return; return on equity or average stockholder's equity; return on assets, investment, or capital employed; share price; margin (including gross margin); income (before or after taxes); operating income; operating income after taxes; pre-tax profit; operating cash flow; sales, annual recurring revenue, or revenue targets; increases in revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per share; share price

performance; debt reduction; customer satisfaction; stockholders' equity; capital expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income or operating income; billings; financing; regulatory milestones; stockholder liquidity; corporate governance and compliance; intellectual property; personnel matters; progress of internal research; progress of partnered programs; partner satisfaction; budget management; partner or collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002; investor relations, analysts and communication; implementation or completion of projects or processes; employee retention; number of users, including unique users; strategic partnerships or transactions (including in-licensing and out-licensing of intellectual property); establishing relationships with respect to the marketing, distribution and sale of the Company's products; supply chain achievements; co-development, co-marketing, profit sharing, joint venture or other similar arrangements; individual performance goals; corporate development and planning goals; and other measures of performance selected by the administrator.

The performance goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates, or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise (i) in the award agreement at the time the award is granted or (ii) in such other document setting forth the performance goals at the time the goals are established, we will appropriately make adjustments in the method of calculating the attainment of performance goals as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are "unusual" in nature or occur "infrequently" as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (8) to exclude the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; and (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles. The administrator retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of the goals. The performance goals may differ from participant to participant and from award to award.

Other Stock Awards. The administrator may grant other awards based in whole or in part by reference to our common stock. The administrator will set the number of shares under the stock award and all other terms and conditions of such awards.

Non-Employee Director Compensation Limit. The aggregate value of all compensation granted or paid to any non-employee director with respect to any calendar year, including stock awards granted and cash fees paid by us to such non-employee director, will not exceed $750,000 in total value, or in the event such non-employee director is first appointed or elected to our board of directors during such calendar year, $1,000,000 in total value (in each case, calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes). Compensation will count towards this limit for the calendar year in which it was granted or earned, and not later when distributed, in the event it is deferred.

Changes to Capital Structure. In the event there is a specified type of change in our capital structure, such as a stock split, reverse stock split, or recapitalization, appropriate adjustments will be made to (i) the class and maximum number of shares reserved for issuance under the 2027 Plan, (ii) the class and maximum number of shares by which the share reserve may increase automatically each year, (iii) the class and maximum number of shares that may be issued on the exercise of ISOs, and (iv) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.

Corporate Transactions. The following applies to stock awards under the 2027 Plan in the event of a corporate transaction, unless otherwise provided in a participant's stock award agreement or other written agreement with us or one of our affiliates or unless otherwise expressly provided by the administrator at the time of grant.

In the event of a corporate transaction, any stock awards outstanding under the 2027 Plan may be assumed, continued or substituted for by any surviving or acquiring corporation (or its parent company), and any reacquisition or

repurchase rights held by us with respect to the stock award may be assigned to the successor (or its parent company). If the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then with respect to any such stock awards that are held by participants whose continuous service has not terminated prior to the effective time of the transaction, or current participants, the vesting (and exercisability, if applicable) of such stock awards will be accelerated in full to a date prior to the effective time of the transaction (contingent upon the effectiveness of the transaction), and such stock awards will terminate if not exercised (if applicable) at or prior to the effective time of the transaction, and any reacquisition or repurchase rights held by us with respect to such stock awards will lapse (contingent upon the effectiveness of the transaction). With respect to performance awards with multiple vesting levels depending on performance level, unless otherwise provided by an award agreement or by the administrator, the award will accelerate at 100% of target. If the surviving or acquiring corporation (or its parent company) does not assume, continue or substitute for such stock awards, then with respect to any such stock awards that are held by persons other than current participants, such awards will terminate if not exercised (if applicable) prior to the effective time of the transaction, except that any reacquisition or repurchase rights held by us with respect to such stock awards will not terminate and may continue to be exercised notwithstanding the transaction. The administrator is not obligated to treat all stock awards or portions of stock awards in the same manner and is not obligated to take the same actions with respect to all participants.

In the event a stock award will terminate if not exercised prior to the effective time of a transaction, the administrator may provide, in its sole discretion, that the holder of such stock award may not exercise such stock award but instead will receive a payment equal in value to the excess (if any) of (i) the value of the property the participant would have received upon the exercise of the stock award over (ii) any exercise price payable by such holder in connection with such exercise.

Under the 2027 Plan, a corporate transaction is defined to include the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) a sale or disposition of all or substantially all of our assets; (ii) a sale or disposition of more than 50% of our outstanding securities; (iii) a merger, consolidation or similar transaction where we do not survive the transaction; and (iv) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding before such transaction are converted or exchanged into other property by virtue of the transaction, unless otherwise provided in an award agreement or other written agreement between us and the award holder.

Change in Control. In the event of a change in control, as defined under the 2027 Plan, awards granted under the 2027 Plan will not receive automatic acceleration of vesting and exercisability, although this treatment may be provided for in an award agreement.

Under the 2027 Plan, a change in control is defined to include: (i) the acquisition by any person or company of more than 50% of the combined voting power of our then outstanding stock; (ii) a consummated merger, consolidation or similar transaction in which our stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity); (iii) a consummated sale, lease, exclusive license or other disposition of all or substantially all of our assets other than to an entity more than 50% of the combined voting power of which is owned by our stockholders; and (iv) an unapproved change in the majority of the board of directors.

Transferability. A participant may not transfer stock awards under the 2027 Plan other than by will, the laws of descent and distribution, or as otherwise provided under the 2027 Plan.

Clawback/Recovery. All awards granted under the 2027 Plan will be subject to recoupment in accordance with any clawback policy that we are required to adopt pursuant to the listing standards of any national securities exchange or association on which our securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other applicable law. In addition, our board of directors may impose such other clawback, recovery or recoupment provisions in a stock award agreement as our board of directors determines necessary or appropriate.

Plan Amendment or Termination. Our board of directors has the authority to amend, suspend, or terminate the 2027 Plan, provided that such action does not materially impair the existing rights of any participant without such participant's written consent. Certain material amendments also require the approval of our stockholders. No ISOs may be granted after the tenth anniversary of the earlier of (i) the date our board of directors adopted the 2027 Plan or (ii) the date the 2027 Plan is approved by our stockholders. No stock awards may be granted under the 2027 Plan while it is suspended or after it is terminated.

U.S. Federal Income Tax Consequences

The following is a summary of the principal U.S. federal income tax consequences to participants and the Company with respect to participation in the 2027 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current U.S. federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend on his or her particular situation, each participant should consult the participant's tax adviser regarding the federal, state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired under the 2027 Plan. The 2027 Plan is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended. The Company's ability to realize the benefit of any tax deductions described below depends on the Company's generation of taxable income as well as the requirement of reasonableness and the satisfaction of the Company's tax reporting obligations.

Tax Consequences to the Participants

Nonstatutory Stock Options. Generally, there is no taxation upon the grant of an NSO. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the participant is employed by the Company or one of its affiliates, that income will be subject to withholding taxes. The participant's tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the participant's capital gain holding period for those shares will begin on the day after they are transferred to the participant.

Incentive Stock Options. The 2027 Plan provides for the grant of stock options that are intended to qualify as "incentive stock options," as defined in Section 422 of the Code. Under the Code, a participant generally is not subject to ordinary income tax upon the grant or exercise of an ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the participant's tax basis in that share will be long-term capital gain or loss. If, however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year. For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant's alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.

Restricted Stock Awards. Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is subject to restrictions constituting a substantial risk of forfeiture when it is received (for example, if the employee is required to work for a period of time in order to have the right to transfer or sell the stock), the recipient generally will not recognize income until the restrictions constituting a substantial risk of forfeiture lapse, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the IRS, within 30 days following the date of grant, to recognize ordinary income, as of the date of grant, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient for the stock. The recipient's basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the restrictions constituting a substantial risk of forfeiture lapse.

Restricted Stock Unit Awards. Generally, the recipient of a restricted stock unit award will generally recognize ordinary income at the time the stock is delivered equal to the excess, if any, of (i) the fair market value of the stock received over any amount paid by the recipient in exchange for the stock or (ii) the amount of cash paid to the participant. The recipient's basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered, and the participant's capital gain holding period for those shares will begin on the day after they are transferred to the participant.

Stock Appreciation Rights. Generally, the recipient of a stock appreciation right will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise. For any shares received upon exercise of a stock appreciation right, the participant's tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the participant's capital gain holding period for those shares will begin on the day after they are transferred to the participant.

Tax Consequences to the Company

Subject to the requirement of reasonableness, the deduction limits under Section 162(m) of the Code and the satisfaction of a tax reporting obligation, the Company will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of an award under the Plan.

Section 162(m) of the Code limits the Company's ability to deduct compensation, for U.S. federal income tax purposes, paid during any taxable year to a "covered employee" (within the meaning of Section 162(m) of the Code) in excess of $1 million.

New Plan Benefits

The awards, if any, that will be granted to eligible persons under the 2027 Plan will be made in the discretion of our Board. Therefore, we cannot currently determine the benefits or number of shares subject to awards that may be granted under the 2027 Plan in the future nor may it determine the amounts that would have been granted in the last completed fiscal year if the 2027 Plan had been in effect.

Registration with the SEC

If the 2027 Plan is approved by our stockholders and becomes effective, the Company intends to file a registration statement on Form S-8 registering the shares reserved for issuance under the 2027 Plan as soon as reasonably practicable after approval of this Proposal No. 3.

Effect of Proposal No. 3

In the event that our stockholders approve this Proposal No. 3, and Proposal Nos. 1, 2 and 4 are also approved, at the Special Meeting, each of the effects that are contingent upon approval of the Required Company Stockholder Matters will also occur. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Effect of Proposal No. 1" for more information.

Pursuant to the Merger Agreement and Purchase Agreement, if we fail to receive sufficient proxies to constitute a quorum or to obtain the required vote on this Proposal No. 3, we would be required to postpone or adjourn the Special Meeting one or more times for up to 30 days per postponement or adjournment. Further, in the event that our stockholders do not approve this Proposal No. 3 at the Special Meeting, we are required to use our reasonable best efforts to secure the approvals sought in this Proposal No. 3 as soon as practicable following the date of the Special Meeting. We will be required to hold an annual meeting or a special meeting at least every six months to solicit and take a vote on the approvals sought in this Proposal No. 3 until such approvals are obtained. The process of continuing to hold stockholder meetings to obtain such approvals would cause us to incur significant legal expenses and could divert our management's attention from the operation of our business. In addition, if we are unable to obtain approval of the Conversion Proposal before the date that is nine months after the initial issuance of the Series A Preferred Stock as a result of successively postponing or adjourning the Special Meeting for failure to receive sufficient votes to approve the Required Company Stockholder Matters, including this Proposal No. 3, we may be required to make significant cash settlement payments to the holders of Series A Preferred Stock.

Interests of Certain Parties

Our directors and executive officers will be eligible to receive equity awards pursuant to the 2027 Plan, if approved. See the section above titled "New Plan Benefits."

In addition, certain directors and executive officers have certain interests in this Proposal No. 2 as a result of it being one of the proposals contained in the Required Company Stockholder Matters. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Interests of Certain Parties." for a description of such interests.

In addition, in connection with the execution of the Merger Agreement, the Company and Vidya entered into Support Agreements with all of our officers and directors (solely in their capacity as stockholders), representing approximately     % of shares of common stock outstanding on the record date. The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of common stock beneficially owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements.

THE BOARD OF DIRECTORS RECOMMENDS

 

A VOTE "FOR" PROPOSAL NO. 3.

PROPOSAL NO. 4

 

APPROVAL OF THE 2027 ESPP

Overview

The Company's stockholders are also being asked to consider and vote upon the 2027 ESPP Proposal to approve the Company's 2027 Employee Stock Purchase Plan (the "2027 ESPP"). Our board of directors approved the 2027 ESPP on September 30, 2026, subject to stockholder approval. If the Company's stockholders approve the 2027 ESPP, the 2027 ESPP will immediately become effective. If the 2027 ESPP is not approved by the Company's stockholders, it will not become effective. The 2027 ESPP is described in more detail below.

The summary is qualified in its entirety by reference to the text of the 2027 ESPP, a copy of which is attached as Annex C to this Proxy Statement. The Company's stockholders should refer to the 2027 ESPP for a more complete and detailed information about the terms and conditions of the 2027 ESPP.

2027 Employee Stock Purchase Plan

The purpose of the 2027 ESPP is to secure and retain the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward our success and that of our affiliates. Our 2027 ESPP will include two components. One component will be designed to allow eligible U.S. employees to purchase our common stock in a manner that may qualify for favorable tax treatment under Section 423 of the Code. The other component will permit the grant of purchase rights that do not qualify for such favorable tax treatment in order to allow deviations necessary to permit participation by eligible employees who are foreign nationals or employed outside of the U.S. while complying with applicable foreign laws.

Eligibility. Our employees and the employees of any of our designated affiliates, will be eligible to participate in the 2027 ESPP, provided they may have to satisfy one or more of the following service requirements before participating in the 2027 ESPP, as determined by the administrator: (1) customary employment with us or one of our affiliates for more than 20 hours per week and more than five months per calendar year or (2) continuous employment with us or one of our affiliates for a minimum period of time, not to exceed two years, prior to the first date of an offering. In addition, our board of directors may also exclude from participation in the 2027 ESPP or any offering, employees who are "highly compensated employees" (within the meaning of Section 423(b)(4)(D) of the Code) or a subset of such highly compensated employees. As of September 30, 2026, we had ten employees. An employee may not be granted rights to purchase stock under the 423 Component of the 2027 ESPP (a) if such employee immediately after the grant would own stock (including stock issuable upon exercise of all such employee's purchase rights) possessing 5% or more of the total combined voting power or value of all classes of our common stock or (b) to the extent that such rights would accrue at a rate that exceeds $25,000 worth of our common stock for each calendar year that the rights remain outstanding. Our board of directors may approve different eligibility rules for the Non-423 Component.

Share Reserve. The 2027 ESPP authorizes the issuance of shares of our common stock under purchase rights granted to our employees or to employees of any of our designated affiliates. Subject to adjustment for specified changes in our capitalization, the maximum number of shares of our common stock that may be issued under the 2027 ESPP will not exceed 3,122,487 shares of common stock (the "Initial Share Reserve"). Additionally, the number of shares of our common stock reserved for issuance under the 2027 ESPP will automatically increase on January 1 of each calendar year, beginning on January 1, 2028 through January 1, 2037, by the lesser of (i) 1% of the total number of Fully Diluted Shares (as defined in the 2027 ESPP, which includes all shares of our common stock outstanding plus all shares issuable upon conversion or exercise of outstanding securities and rights, including preferred stock on an as-converted basis, equity awards, warrants (including pre-funded warrants), and any convertible indebtedness or similar instruments, whether or not then vested or currently exercisable) on December 31 of the preceding calendar year, and (ii) 9,367,461 shares of common stock; provided that before the date of any such increase, our board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii). As of    , 2026, the closing price of the Company's common stock as reported on Nasdaq was $     per share.

Administration. Our board of directors, or a duly authorized committee thereof, will administer our 2027 ESPP. Our board may delegate concurrent authority to administer the 2027 ESPP to our compensation committee under the terms of the compensation committee's charter. The 2027 ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of our common stock on specified dates during such offerings. Under the 2027 ESPP, we may specify offerings with durations of not more than 27 months and may

specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our common stock will be purchased for employees participating in the offering. An offering under the 2027 ESPP may be terminated under certain circumstances.

Payroll Deductions. Generally, all regular employees, including executive officers, employed by us or by any of our designated affiliates, will be eligible to participate in the 2027 ESPP and to contribute, normally through payroll deductions, up to a maximum percentage of their earnings (as defined in the 2027 ESPP) or up to a set dollar amount for the purchase of our common stock under the 2027 ESPP, in each case not exceeding the maximum amount specified by our board of directors. Unless otherwise determined by our board of directors, common stock will be purchased for the accounts of employees participating in the 2027 ESPP at a price per share that is at least the lesser of (i) 85% of the fair market value of a share of our common stock on the first date of an offering; or (ii) 85% of the fair market value of a share of our common stock on the date of purchase.

Limitations. Employees may have to satisfy one or more of the following service requirements before participating in the 2027 ESPP, as determined by our board of directors, including: (i) customary employment with us or one of our affiliates for more than 20 hours per week and more than five months per calendar year; or (ii) continuous employment with us or one of our affiliates for a minimum period of time (not to exceed two years). No employee may purchase shares under the 2027 ESPP at a rate in excess of $25,000 worth of our common stock based on the fair market value per share of our common stock at the beginning of an offering for each year such a purchase right is outstanding. Finally, no employee will be eligible for the grant of any purchase rights under the 2027 ESPP if immediately after such rights are granted, such employee has voting power over 5% or more of our outstanding capital stock measured by vote or value under Section 424(d) of the Code.

Changes to Capital Structure. In the event that there occurs a change in our capital structure through such actions as a stock split, merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or similar transaction, the board of directors will make appropriate adjustments to: (i) the number of shares reserved under the 2027 ESPP; (ii) the maximum number of shares by which the share reserve may increase automatically each year; (iii) the number of shares and purchase price of all outstanding purchase rights; and (iv) the number of shares that are subject to purchase limits under ongoing offerings.

Corporate Transactions. In the event of certain significant corporate transactions, including the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events: (i) a sale of all or substantially all of our assets; (ii) a sale or disposition of more than 50% of our outstanding securities; (iii) a merger or consolidation where we do not survive the transaction; and (iv) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction, any then-outstanding rights to purchase our stock under the 2027 ESPP may be assumed, continued or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue, or substitute for such purchase rights, then the participants' accumulated payroll contributions will be used to purchase shares of our common stock within ten business days before such corporate transaction, and such purchase rights will terminate immediately after such purchase.

2027 ESPP Amendment or Termination. Our board of directors has the authority to amend, suspend, or terminate our 2027 ESPP. However, except as provided in connection with capitalization adjustments, stockholder approval will be required for any amendment of the 2027 ESPP for which stockholder approval is required by applicable law. Any benefits, privileges, entitlements and obligations under any outstanding purchase rights granted before an amendment, suspension or termination of the 2027 ESPP will not be materially impaired by any such amendment, suspension or termination except (i) with the consent of the person to whom such purchase rights were granted, (ii) as necessary to facilitate compliance with any laws, listing requirements, or governmental regulations, or (iii) as necessary to obtain or maintain favorable tax, listing, or regulatory treatment. No purchase rights may be granted under the 2027 ESPP while it is suspended or after it is terminated.

U.S. Federal Income Tax Consequences

The following is a summary of the principal U.S. federal income tax consequences to participants and the Company with respect to participation in the 2027 ESPP. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current U.S. federal income tax rules and therefore is subject to change when those rules change. Because

the tax consequences to any participant may depend on his or her particular situation, each participant should consult the participant's tax adviser regarding the federal, state, local, and other tax consequences of the grant or exercise of a purchase right or the sale or other disposition of the Company's common stock acquired under the 2027 ESPP. The 2027 ESPP is not qualified under the provisions of Section 401(a) of the Code and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.

Tax Consequences to Participants

423 Component of the 2027 ESPP. Rights granted under the 423 Component of the 2027 ESPP are intended to qualify for favorable U.S. federal income tax treatment associated with rights granted under an employee stock purchase plan which qualifies under the provisions of Section 423 of the Code.

A participant will be taxed on amounts withheld for the purchase of shares of the Company's common stock as if such amounts were actually received. Otherwise, no income will be taxable to a participant as a result of the granting or exercise of a purchase right until a sale or other disposition of the acquired shares. The taxation upon such sale or other disposition will depend upon the holding period of the acquired shares.

If the shares are sold or otherwise disposed of more than two years after the beginning of the offering period and more than one year after the shares are transferred to the participant, then the lesser of the following will be treated as ordinary income: (i) the excess of the fair market value of the shares at the time of such sale or other disposition over the purchase price; or (ii) the excess of the fair market value of the shares as of the beginning of the offering period over the purchase price (determined as of the beginning of the offering period). Any further gain or any loss will be taxed as a long-term capital gain or loss.

If the shares are sold or otherwise disposed of before the expiration of either of the holding periods described above, then the excess of the fair market value of the shares on the purchase date over the purchase price will be treated as ordinary income at the time of such sale or other disposition. The balance of any gain will be treated as capital gain. Even if the shares are later sold or otherwise disposed of for less than their fair market value on the purchase date, the same amount of ordinary income is attributed to the participant, and a capital loss is recognized equal to the difference between the sales price and the fair market value of the shares on such purchase date. Any capital gain or loss will be short-term or long-term, depending on how long the shares have been held.

Non-423 Component. A participant will be taxed on amounts withheld for the purchase of shares of the Company's common stock as if such amounts were actually received. Under the Non-423 Component, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the purchase right over the purchase price. If the participant is employed by the Company or one of its affiliates, that income will be subject to withholding taxes. The participant's tax basis in those shares will be equal to their fair market value on the date of exercise of the purchase right, and the participant's capital gain holding period for those shares will begin on the day after they are transferred to the participant.

Tax Consequences to the Company

There are no U.S. federal income tax consequences to the Company by reason of the grant or exercise of rights under the 2027 ESPP. The Company is entitled to a deduction to the extent amounts are taxed as ordinary income to a participant for shares sold or otherwise disposed of before the expiration of the holding periods described above (subject to the requirement of reasonableness, the deduction limits under Section 162(m) of the Code and the satisfaction of tax reporting obligations). Section 162(m) of the Code limits the Company's ability to deduct compensation, for U.S. federal income tax purposes, paid during any taxable year to a "covered employee" (within the meaning of Section 162(m) of the Code) in excess of $1 million.

New Plan Benefits

Participation in the 2027 ESPP is voluntary and each eligible employee will make his or her own decision regarding whether and to what extent to participate in the 2027 ESPP. Therefore, the Company cannot currently determine the benefits or number of shares subject to purchase rights and a new plan benefits table is thus not provided. In addition, the Company cannot determine the benefits or number of shares subject to purchase rights or that would have been received by an eligible employee in the last completed fiscal year if the 2027 ESPP had been in effect.

Registration with the SEC

If the 2027 ESPP is approved by our stockholders and becomes effective, the Company intends to file a registration statement on Form S-8 registering the shares reserved for issuance under the 2027 ESPP as soon as reasonably practicable after the approval of this Proposal No. 4.

Effect of Proposal No. 4

In the event that our stockholders approve this Proposal No. 4, and Proposal Nos. 1, 2 and 3 are also approved, at the Special Meeting, each of the effects that are contingent upon approval of the Required Company Stockholder Matters will also occur. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Effect of Proposal No. 1" for more information.

Pursuant to the Merger Agreement and Purchase Agreement, if we fail to receive sufficient proxies to constitute a quorum or to obtain the required vote on this Proposal No. 4, we would be required to postpone or adjourn the Special Meeting one or more times for up to 30 days per postponement or adjournment. Further, in the event that our stockholders do not approve this Proposal No. 4 at the Special Meeting, we are required to use our reasonable best efforts to secure the approvals sought in this Proposal No. 4 as soon as practicable following the date of the Special Meeting. We will be required to hold an annual meeting or a special meeting at least every six months to solicit and take a vote on the approvals sought in this Proposal No. 4 until such approvals are obtained. The process of continuing to hold stockholder meetings to obtain such approvals would cause us to incur significant legal expenses and could divert our management's attention from the operation of our business. In addition, if we are unable to obtain approval of the Conversion Proposal before the date that is nine months after the initial issuance of the Series A Preferred Stock as a result of successively postponing or adjourning the Special Meeting for failure to receive sufficient votes to approve the Required Company Stockholder Matters, including this Proposal No. 4, we may be required to make significant cash settlement payments to the holders of Series A Preferred Stock.

Interests of Certain Parties

Our executive officers who meet the eligibility requirements of the 2027 ESPP will be entitled to participate in the 2027 ESPP, if approved. See the section above titled "New Plan Benefits."

In addition, certain directors and executive officers have certain interests in this Proposal No. 3 as a result of it being one of the proposals contained in the Required Company Stockholder Matters. See the section titled "Proposal No. 1-Approval of issuance of shares of our common stock, upon conversion of our Series A Preferred Stock and exercise of the Vidya Options, which (a) will represent more than 20% of the shares of common stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board, result in the change of control of the Company pursuant to Nasdaq Listing Rule 5635(b)-Interests of Certain Parties." for a description of such interests.

In addition, in connection with the execution of the Merger Agreement, the Company and Vidya entered into Support Agreements with all of our officers and directors (solely in their capacity as stockholders), representing approximately     % of shares of common stock outstanding on the record date. The Support Agreements provide that, among other things, each of the parties thereto has agreed to vote or cause to be voted all of the shares of common stock beneficially owned by such stockholder in favor of Proposals Nos. 1, 2, 3, 4 and 5 at the Special Meeting, subject to and in accordance with the terms of the Support Agreements.

THE BOARD OF DIRECTORS RECOMMENDS

 

A VOTE "FOR" PROPOSAL NO. 4.

PROPOSAL NO. 5

 

APPROVAL OF ADJOURNMENT OR POSTPONEMENT OF THE SPECIAL MEETING TO A LATER DATE OR DATES, IF NECESSARY, TO SOLICIT VOTES FOR PROPOSALS NOS. 1, 2 3 AND/OR 4 OR, IF NECESSARY, IF THE NASDAQ INITIAL LISTING APPLICATION HAS NOT YET BEEN APPROVED

If at the Special Meeting the number of votes represented by shares of our common stock present or represented and voting in favor of any of Proposals Nos. 1, 2, 3 and/or 4 is insufficient to approve the applicable Proposal, or, if necessary, if the Nasdaq Initial Listing Application has not yet been approved, the chair of the Special Meeting may postpone the Special Meeting prior to its scheduled time or move to adjourn the Special Meeting in order to enable our Board to continue to solicit additional proxies in favor of any of Proposals Nos. 1, 2, 3 and/or 4 or to enable additional time to obtain the approval of the Nasdaq Listing Application.

In this Proposal No. 5, we are asking our stockholders to authorize the holder of any proxy solicited to vote in favor of adjourning, postponing or continuing the Special Meeting and any later adjournments. If our stockholders approve the adjournment, postponement or continuation proposal, we could adjourn, postpone or continue the Special Meeting, and any adjourned session of the Special Meeting, to use the additional time to solicit additional proxies in favor of any of Proposals Nos. 1, 2, 3 and/or 4, including the solicitation of proxies from stockholders that have previously voted against the Proposals, or to enable additional time to obtain the approval of the Nasdaq Listing Application. If stockholder approval for this Proposal No. 5 is not obtained, then the Special Meeting will not be adjourned.

We are required to use our reasonable best efforts to secure the approvals sought in Proposal Nos. 1, 2, 3 and 4 as soon as practicable following the date of the Special Meeting if they are not approved at the Special Meeting. We will be required to hold an annual meeting or a special meeting at least every six months to solicit and take a vote on the approvals sought in Proposal Nos. 1, 2, 3 and 4 until such approvals are obtained.

THE BOARD OF DIRECTORS RECOMMENDS

 

A VOTE "FOR" PROPOSAL NO. 5.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the beneficial ownership of our common stock as of September 30, 2026 for:

The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. Under these rules, beneficial ownership includes any shares of common stock over which the person has sole or shared voting power or investment power as well as any shares that the person has the right to acquire within 60 days after September 30, 2026 through the exercise of any stock option, warrant or other rights.

The percentage of shares beneficially owned is based on 2,798,214 shares of our common stock outstanding as of September 30, 2026. Shares of our common stock that a person has the right to acquire within 60 days of September 30, 2026 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group. Due to the conversion limitations on the Series A Preferred Stock and the exercise limitations of the Vidya Options, shares of common stock issuable upon the conversion of Series A Preferred Stock and exercise of the Vidya Options, if approved by our stockholders, have been excluded from beneficial ownership set forth below. Except as otherwise noted below, the address for each beneficial owner listed is c/o Processa Pharmaceuticals, Inc., 601 21^st Street, Suite 300, Vero Beach, FL 32960.

Soleus GP, LLC is the sole general partner of SCM. Guy Levy is the sole managing member of each of SCG and of Soleus GP, LLC. Each of SCG, Soleus Capital, SCM, Soleus GP, LLC and Mr. Levy disclaims beneficial ownership of the shares held by Master Fund other than for the purpose of determining their obligations under Section 13(d) of the Exchange Act. The principal business address of each of the foregoing entities and person is 100 Field Point Road, Suite 200, Greenwich, CT 06830.

EXECUTIVE COMPENSATION

All of the information contained in the sections below generally relates to our named executive officer compensation for fiscal years ended December 31, 2025 and 2024 and was included in our Definitive Proxy Statement on Schedule 14A for our 2026 annual meeting of stockholders filed with the SEC on June 18, 2026 (the "Annual Proxy Statement"). Since the date of the Annual Proxy Statement, Ms. Sian Bigora transitioned from a full-time executive officer role to a part-time employee position.

Our named executive officers ("NEOs") for fiscal 2025 consisted of the following individuals:

SUMMARY COMPENSATION TABLE

The following table sets forth all of the compensation awarded to, earned by, or paid to each of the NEOs for their services rendered for the years ended December 31, 2025 and 2024.

NARRATIVE TO SUMMARY COMPENSATION TABLE AND OUTSTANDING EQUITY AWARDS TABLE

Overview of Our Executive Compensation Philosophy and Design

We believe that a skilled, experienced and dedicated executive and senior management team is essential to the future performance of our Company and to building stockholder value. We have sought to establish competitive compensation programs that enable us to attract and retain executive officers with these qualities. The other objectives of our compensation programs for our executive officers are the following:

Setting Executive Compensation

Our compensation committee has primary responsibility for, among other things, determining our compensation philosophy, evaluating the performance of our named executive officers, setting the compensation and other benefits of our named executive officers and administering our equity compensation plan.

It is our CEO's responsibility to provide recommendations to the compensation committee for most compensation matters related to executive compensation. The recommendations are based on a general analysis of market standards and trends and an evaluation of the contribution of each executive officer to our performance. Our compensation committee considers, but retains the right to accept, reject or modify such recommendations and has the right to obtain independent compensation advice. Neither the CEO nor any other members of management is present during executive sessions of the compensation committee. The CEO is not present when decisions with respect to his compensation are made. Our Board of Directors appoints the members of our compensation committee and delegates to the compensation committee the direct responsibility for overseeing the design and administration of our executive compensation program.

In 2025, we hired a compensation consultant to review the compensation of our named executive officers and provide recommendations.

Elements of Executive Compensation

We believe the most effective compensation package for our named executive officers is one designed to reward achievement of individual and corporate objectives; provide for short-, medium- and long-term financial and strategic goals; and align the interest of management with those of the stockholders by providing incentives for improving stockholder value. To accomplish that objective, our named executive officers have, and it is anticipated will continue, to receive a portion of their annual compensation in equity, such as stock options and RSUs.

Base Cash Compensation - We pay our named executive officers base cash compensation to compensate them for services rendered and to provide them with a steady source of income for living expenses throughout the year. In 2025, our named executive officers received base salaries ranging between $308,000 and $400,000, depending on their position and responsibilities.

Adjustments to base salaries are expected to be determined annually and may be increased based on the executive officer's success in meeting or exceeding individual objectives, as well as to maintain market competitiveness. Additionally, base salaries can be adjusted as warranted throughout the year to reflect promotions or other changes in the scope of breadth of an executive officer's role or responsibilities.

Bonuses - During 2025, Mr. Ng received $50,000 and Mr. Skibsted received $55,000 in bonus compensation for their efforts related to business development and financing deals. Dr. Bigora received $40,000 in bonus compensation for her past service and ongoing commitment to the Company.

Equity Awards - We have used equity awards to align the interest of our named executive officers with those of our stockholders, as the value of the awards granted thereunder is linked to the value of our common stock, which, in turn, is indirectly attributable to the performance of our executive officers.

In 2025, we granted stock options for the purchase of 55,200 shares of our common stock to our named executive officers totaling a grant date fair value of approximately $267,000, which vest one-third on October 1, 2026, and then ratably monthly afterward until they are fully vested on October 1, 2028, subject to continued service. We also granted RSUs for 18,400 shares of our common stock to our NEOs totaling a grant date fair value of approximately $91,000, which vest one-third on October 1, 2026, and then ratably monthly afterward until they are fully vested on October 1, 2028, subject to continued service.

In 2024, we granted RSUs for 131 shares of our common stock to Dr. Bigora totaling a grant date fair value of approximately $7,000, which vest accordingly: RSUs for 97 shares of our common stock vest over a three-year period upon meeting service requirements; RSUs for 17 shares of our common stock vested upon grant for regaining Nasdaq compliance; and RSUs for 17 shares of common stock vested upon dosing the first patient in our Phase 2 study in NGC-Cap, in each instance subject to continued service. Upon joining the Company in 2024, we granted Mr. Skibsted RSUs for 1,120 shares of our common stock with a grant date fair value of $49,000, which vest accordingly: 560 vested on July 16, 2026; 280 vest upon reaching a market capitalization (i.e. total value of Processa's outstanding shares of stock at the then current market place) of at least $30 million; and 280 vested on August 4, 2025 upon receipt of cumulative financings of at least $15 million, subject to continued service.

We measure compensation expense for RSUs in accordance with ASC 718, Compensation-Stock Compensation. Stock-based compensation is measured at fair value on grant date and recognized as compensation expense over the

requisite service period. For awards with only service-based vesting conditions, we record their fair value as compensation cost using the straight-line method over the service period. For awards that contain performance vesting conditions, we do not recognize the fair value of the awards as compensation expense until achieving the performance condition is considered probable.

Retirement and Other Benefits - We maintain a defined contribution employee retirement plan for our employees, including our named executive officers. The plan is intended to qualify as a tax-qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions). Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan's trustee as directed by participants. The 401(k) plan provides us with the discretion to match employee contributions. We currently do not match employee contributions.

Employment Agreements

George Ng Employment Agreement. On March 19, 2025, we entered into an employment agreement with Mr. Ng that continues until terminated or modified pursuant to the terms of the employment agreement.

Mr. Ng's employment agreement entitled him to, among other benefits, the following compensation: (i) an annual base salary of $400,000, reviewed annually; (ii) RSUs previously granted under our 2019 Omnibus Incentive Plan along with additional grants made at the discretion of the Compensation Committee of the Board; and (iii) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other executive officers of the Company. He is also eligible to participate in an executive bonus pool with a target bonus of 50% of his base compensation.

Russell Skibsted Employment Agreement. On March 19, 2025, we entered into an employment agreement with Mr. Skibsted that continues until terminated or modified pursuant to the terms of the employment agreement.

Mr. Skibsted's employment agreement entitled him to, among other benefits, the following compensation: (i) an annual base salary of $400,000; (ii) a $50,000 base salary increase upon a cumulative (one or multiple) financing of at least $15 million that he leads and substantially participates in; (iii) RSUs previously granted under our 2019 Omnibus Incentive Plan along with additional grants made at the discretion of the Compensation Committee of the Board; and (iv) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other executive officers of the Company. He is also eligible to participate in an executive bonus pool with a target bonus of 40% of his base compensation.

Wendy Guy Employment Agreement. On March 19, 2025, we entered into an employment agreement with Ms. Guy that continues until terminated or modified pursuant to the terms of the employment agreement.

Ms. Guy's employment agreement entitled her to, among other benefits, the following compensation: (i) an annual base salary of $325,520; (ii) RSUs previously granted under our 2019 Omnibus Incentive Plan along with additional grants made at the discretion of the Compensation Committee of the Board; and (iii) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other executive officers of the Company. She is also eligible to participate in an executive bonus pool with a target bonus of 30% of her base compensation.

Patrick Lin Employment Agreement. On March 19, 2025, we entered into an employment agreement with Mr. Lin that continues until terminated or modified pursuant to the terms of the employment agreement.

Mr. Lin's employment agreement entitled him to, among other benefits, the following compensation: (i) an annual base salary of $325,520; (ii) RSUs previously granted under our 2019 Omnibus Incentive Plan along with additional grants made at the discretion of the Compensation Committee of the Board; and (iii) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other executive officers of the Company. He is also eligible to participate in an executive bonus pool with a target bonus of 30% of his base compensation.

David Young Employment Agreement. On March 19, 2025, we entered into an employment agreement with Dr. Young that continues until terminated or modified pursuant to the terms of the employment agreement.

Dr. Young's employment agreement entitled him to, among other benefits, the following compensation: (i) an annual base salary of $387,920; (ii) RSUs previously granted under our 2019 Omnibus Incentive Plan along with additional grants made at the discretion of the Compensation Committee of the Board; and (iii) participation in welfare benefit plans, practices, policies and programs (including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) made available to other executive officers of the Company. He is also eligible to participate in an executive bonus pool with a target bonus of 40% of his base compensation.

Potential Payments Upon Termination or Change in Control

All executive employment agreements provide that either party may terminate the agreement at-will, and regardless of the manner in which such executive's service terminates, the executive is entitled to receive amounts earned during his or her term of service, including salary and other benefits. In addition, the agreements provide that in the event of the executive's death or Permanent Disability, termination for Good Reason, termination by Processa Without Cause, or a Termination as a Result of a Change in Control, the executive will be eligible to receive the following severance benefits: (i) an amount equal to one-year's annual base salary and target bonus; and (ii) 12 months of continued health coverage. In addition, all unvested equity awards shall immediately vest upon a Change in Control.

The following definition is contained in the employment agreements:

All severance benefits payable to the executive under the employment agreement are subject to the executive executing and not revoking a separation agreement reasonably satisfactory to the Company and to the executive, which includes a general release of all claims in favor of Processa.

Employee Non-Competition, Non-Solicitation, Invention and Non-Disclosure Agreements

Each of our named executive officers has entered into standard form agreements with respect to non-competition, non-solicitation, invention and non-disclosure. Under these agreements, each of our named executive officers has agreed not to compete with us during his or her employment and for a period of one year after the termination of his or her employment, not to solicit our employees, consultants, customers, business or prospective customers during his or her employment and for a period of one year after the termination of his or her employment, and to protect our confidential and proprietary information indefinitely. In addition, under these agreements, each named executive officer has agreed that we own all inventions that are developed by such named executive officer during his or her employment with us that (i) are related to our business or our customers or suppliers or any of our products or services being researched, developed, manufactured or sold by us or which may be used with such products or services; (ii) result from tasks assigned to the executive officer by us; or (iii) result from the use of our premises or personal property (whether tangible or intangible) owned, leased or contracted for by us.

Processa Pharmaceuticals, Inc. 2019 Omnibus Incentive Plan

We maintain an Omnibus Plan that currently provides us with the authority to issue up to 432,000 shares of our common stock to eligible participants. The two complementary goals of the Omnibus Plan are to attract and retain outstanding individuals to serve as our officers, directors, employees and consultants, and to increase stockholder value by providing participants incentives to increase stockholder value by offering the opportunity to acquire shares of our common stock, receive monetary payments based on the value of our common stock and receive other incentive compensation on the potentially favorable terms that the Plan provides.

Outstanding Equity Awards at Fiscal Year-End

The following table lists the outstanding equity awards held by each of our named executive officers as of December 31, 2025:

Pay Versus Performance Table

In accordance with rules adopted by the Securities and Exchange Commission ("SEC"), we are providing the following disclosure regarding executive compensation for our principal executive officer ("PEO") and Non-PEO named executive officers ("Non-PEO NEOs") and Company performance for the fiscal years listed below. The amounts in the table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by our named executive officers ("NEOs").

George Ng:

Pay Versus Performance Descriptive Disclosure

Below are graphs showing the relationship of "compensation actually paid" to our PEOs and non-PEO NEOs in 2023, 2024, and 2025 to (1) our Total Shareholder Return ("TSR") and (2) our net income.

 

 

Director Compensation

On September 23, 2025, our compensation committee recommended, and our Board of Directors approved, an amendment to our compensation plan for non-employee directors. Each non-employee director receives annual cash compensation for serving as a director ranging between $72,500 and $86,500 after the Company has completed one or

more financings of a cumulative $60 million and the Company has at least $20 million in cash or cash equivalents. Until those milestones have been reached, they are each receiving a quarterly cash retainer of $14,000. They each also received stock options for the purchase of 12,000 shares of common stock, which had a grant date fair value of $58,075; as well as RSUs for the future issuance of 4,000 shares of common stock, which had a grant date fair value of $19,800. The stock options and RSUs all vest one-third on October 1, 2026, and the remaining vest monthly afterward until they are fully vested on October 1, 2028, subject to continued service with us.

Our directors are also reimbursed for any reasonable out-of-pocket expenses incurred in connection with service as a director.

The table below shows all compensation paid or earned to our non-employee directors during the year ended December 31, 2025.

Outstanding Equity Awards at Fiscal Year-End

The following table lists the outstanding equity awards held by each of our non-employee directors as of December 31, 2025:

Policies and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

From time to time, the Company grants equity-based compensation to its employees, including the named executive officers. Historically, the Company has granted new-hire awards on or soon after a new hire's employment start date and annual employee grants in the first quarter of each fiscal year, which annual grants are typically approved by the Compensation Committee or pursuant to the Chief Executive Officer's delegation of authority. Also, non-employee directors receive automatic grants of initial and annual awards, at the time of a director's initial appointment or election to the board and at the time of each annual meeting of the Company's stockholders or subsequent to that annual meeting, respectively. The Company does not otherwise maintain any written policies on the timing of awards of equity compensation. The CEO and Compensation Committee consider whether there is any material nonpublic information (MNPI) about the Company when determining the timing of equity grants and does

DESCRIPTION OF CAPITAL STOCK

General

Under our certificate of incorporation, our authorized capital stock consists of 1,000,000,000 shares of common stock, $0.0001 par value per share, and 1,000,000 shares of preferred stock. Our Board may establish the rights and preferences of the undesignated preferred stock from time to time.

Common Stock

Voting

Each outstanding share of our common stock is entitled to one vote on all matters submitted to a vote of stockholders generally. In the event we issue one or more series of preferred or other securities in the future such preferred stock or other securities may be given rights to vote, either together with the common stock or as a separate class on one or more types of matters. The holders of our common stock do not have cumulative voting rights.

Dividends

Subject to the rights of holders of preferred stock of any series that may be issued and outstanding from time to time, holders of our common stock are entitled to receive such dividends and other distributions as may be declared by our Board of Directors from time to time.

Liquidation

In the event of any liquidation, dissolution or winding up of the Company, the holders of our common stock will be entitled, subject to any preferential or other rights of any then outstanding preferred stock, to receive all assets of the Company available for distribution to stockholders.

Rights and Preferences

As of the record date, the holders of our common stock have no preemptive rights in their capacities as such holders.

Board of Directors

Holders of common stock do not have cumulative voting rights with respect to the election of directors. At any meeting to elect directors by holders of our common stock, the presence, in person or by proxy, of the holders of one-third of the voting power of shares of our capital stock then outstanding will constitute a quorum for such election. Directors may be elected by a plurality of the votes of the shares present and entitled to vote on the election of directors, except for directors whom the holders of any then outstanding preferred stock have the right to elect, if any.

Preferred Stock

Our Board is authorized, subject to certain limitations prescribed by law, without further stockholder approval, to issue from time to time up to an aggregate of 1,000,000 shares of preferred stock in one or more series and to fix or alter the designations, preferences, rights and any qualifications, limitations or restrictions of the shares of each such series thereof, including the dividend rights, dividend rates, conversion rights, voting rights and terms of redemption of shares constituting any series or designations of such series. The rights of holders of our common stock may be subject to, and adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock may have the effect of delaying, deferring or preventing a change of control and may adversely affect the voting and other rights of holders of our common stock.

Series A Non-Voting Convertible Preferred Stock

On July 28, 2026, our Board designated 307,063.330 shares of preferred stock as Series A Non-Voting Convertible Preferred Stock. As of   , 2026, we had 306,574.202 shares of preferred stock outstanding, all of which are Series A Non-Voting Convertible Preferred Stock. Each share of Series A Non-Voting Convertible Preferred Stock is convertible into 1,000 shares of common stock, subject to certain limitations, as described above. The rights of the Series A

Non-Voting Convertible Preferred Stock are set forth in the Certificate of Designation, attached as Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on July 29, 2026. Please see "Description of Series A Preferred Stock" under Proposal No. 1 for a complete description of the Certificate of Designation and the rights of the Series A Non-Voting Convertible Preferred Stock.

Indemnification of Directors and Officers

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by the Delaware General Corporate Law ("DGCL") as it may hereafter be amended, none of our directors will be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director. Under the DGCL as it now reads, such limitation of liability is not permitted for any breach of the director's duty of loyalty to us or our stockholders;

These provisions will have no effect on the availability of equitable remedies such as an injunction or rescission based on a director's breach of his or her duty of care.

Our amended and restated certificate of incorporation and our amended and restated bylaws include provisions that require us to indemnify and advance expenses, to the fullest extent allowable under the DGCL as it now exists or may hereafter be amended, to our directors or officers for actions taken as a director or officer of us, or for serving at our request as a director or officer at another corporation or enterprise, as the case may be.

Section 145 of the DGCL provides that a corporation may indemnify directors and officers, as well as other employees and individuals, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement, that are incurred in connection with various actions, suits or proceedings, whether civil, criminal, administrative or investigative, other than an action by or in the right of the corporation, known as a derivative action, if they acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. A similar standard is applicable in the case of derivative actions, except that indemnification only extends to expenses, including attorneys' fees, incurred in connection with the defense or settlement of such actions, and the statute requires court approval before there can be any indemnification if the person seeking indemnification has been found liable to the corporation. The statute provides that it is not exclusive of other indemnification that may be granted by a corporation's bylaws, disinterested director vote, stockholder vote, agreement or otherwise.

Our amended and restated bylaws require us to indemnify any person who was or is a party or is threatened to be made a party to, or was otherwise involved in, a legal proceeding by reason of the fact that he or she is or was a director or officer of the Company or is or was serving at our request as a director or officer of another corporation or enterprise, as the case may be, to the fullest extent authorized by the DGCL as it now exists or may hereafter be amended, against all expense, liability and loss (including attorneys' fees, judgments, fines, Employee Retirement Income Security Act excise taxes or penalties and amounts paid in settlement) reasonably incurred or suffered by such director or officer in connection with such service; provided, however, that, with respect to proceedings to enforce rights to indemnification, we are required to indemnify such a person in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by our Board of Directors. The right to indemnification in our amended and restated bylaws includes the right to be paid by the Company the expenses incurred in defending any proceeding for which indemnification may be sought in advance of the final disposition of such proceeding, subject to certain limitations. We carry directors' and officers' insurance protecting us, any director, officer, employee or agent of ours or who was serving at the request of the Company as a director, officer, employee or agent of another corporation or enterprise, as the case may be, against any expense, liability or loss, whether or not we would have the power to indemnify the person under the DGCL.

The limitation of liability and indemnification and advancement provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of fiduciary duty. These provisions also may reduce the likelihood of derivative litigation against our directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. In addition, your investment in our common stock may be adversely affected to the extent we pay the costs of settlement and damage awards under these indemnification provisions.

Certain Anti-Takeover Effects

Provisions of Delaware Law. We are a Delaware corporation and Section 203 of the DGCL applies to us. It is an anti-takeover statute that is designed to protect stockholders against coercive, unfair or inadequate tender offers and other abusive tactics and to encourage any person contemplating a business combination with us to negotiate with our Board of Directors for the fair and equitable treatment of all stockholders.

Under Section 203 of the DGCL, a Delaware corporation is not permitted to engage in a "business combination" with an "interested stockholder" for a period of three years following the date that the stockholder became an interested stockholder. As defined for this purpose, the term "business combination" includes a merger, consolidation, asset sale or other transaction resulting in a financial benefit to the interested stockholder. The term "interested stockholder" is defined to mean a person who, together with affiliates and associates, owns, or within three years did own, 15% or more of the corporation's outstanding voting stock. This prohibition does not apply if:

A Delaware corporation may elect not to be governed by these restrictions. We have not opted out of Section 203.

Advance Notice Procedures. Our bylaws establish an advance notice procedure for stockholder nominations of persons for election to our Board of Directors and for any proposals to be presented by stockholders at an annual meeting. Stockholders at an annual meeting will only be able to consider nominations and other proposals specified in the notice of meeting or brought before the meeting by or at the direction of our Board of Directors or by a stockholder who was a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has given our corporate secretary timely written notice, in proper form, of the stockholder's intention to nominate a person for election as a director or to bring a proposal for action at the meeting.

Potential Effects of Authorized but Unissued Stock

Pursuant to our amended and restated certificate of incorporation, we have shares of common stock and preferred stock available for future issuance without stockholder approval. We may utilize these additional shares for a variety of corporate purposes, including future public offerings to raise additional capital, to facilitate corporate acquisitions or payment as a dividend on the capital stock.

The existence of unissued and unreserved common stock and preferred stock may enable our Board of Directors to issue shares to persons friendly to current management or to issue preferred stock with terms that could render more difficult or discourage a third-party attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, thereby protecting the continuity of our management. In addition, the board of directors has the discretion to determine designations, rights, preferences, privileges and restrictions, including voting rights, dividend rights, conversion rights, redemption privileges and liquidation preferences of each series of preferred stock, all to the fullest extent permissible under the Delaware General Corporation Law and subject to any limitations set forth in our certificate of incorporation. The purpose of authorizing the board of directors to issue preferred stock and to determine the rights and preferences applicable to such preferred stock is to eliminate delays associated with a stockholder vote on specific issuances. The issuance of preferred stock, while providing desirable flexibility in connection with possible financings, acquisitions and other corporate purposes, could have the effect of making it more difficult for a third-party to acquire, or could discourage a third-party from acquiring, a majority of our outstanding voting stock.

Choice of Forum

Unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery lacks jurisdiction, the federal district court for the District of Delaware, unless said court lacks subject matter jurisdiction, in which case the Superior Court of the State of Delaware) shall be the sole

and exclusive forum for any stockholder to bring (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company's stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, our certificate of incorporation or bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine, except for, as to each of (i) through (iv) above, any claim (A) as to which the Court of Chancery determines there is an indispensable party not subject to its jurisdiction (and such party does not consent to the Court of Chancery's personal jurisdiction within ten days of such determination), (B) which is vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery, or (C) for which the Court of Chancery does not have subject matter jurisdiction. This provision will not apply to claims arising under the Exchange Act, or for any other federal securities laws which provide for exclusive federal jurisdiction. However, the exclusive forum provision provides that unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. Therefore, this provision could apply to a suit that falls within one or more of the categories enumerated in the exclusive forum provision and that asserts claims under the Securities Act, inasmuch as Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder. There is uncertainty as to whether a court would enforce such an exclusive forum provision with respect to claims under the Securities Act. If any action within the scope of the preceding sentences is filed in a court other than a court located within the State of Delaware in the name of any stockholder, such stockholder shall be deemed to have consented to the personal jurisdiction of the state and federal courts located within the State of Delaware in connection with any action to enforce the foregoing, and to service of process upon such stockholder's counsel in such other action as agent for such stockholder.

We note that there is uncertainty as to whether a court would enforce the provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Although we believe this provision benefits us by providing increased consistency in the application of Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Continental Stock Transfer & Trust Company. The transfer agent's address is 1 State Street, 30^th Floor, New York, NY 10004.

Exchange Listing

Our common stock is listed on the Nasdaq Capital Market under the symbol "PCSA."

EQUITY COMPENSATION PLAN INFORMATION

The following table presents information as of December 31, 2025 with respect to all of the Company's equity compensation plans under which shares of our common stock may be issued.

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (for example, brokers) to satisfy the delivery requirements for Special Meeting materials with respect to two or more stockholders sharing the same address by delivering a single set of Special Meeting materials addressed to those stockholders. This process, which is commonly referred to as "householding," potentially means extra convenience for stockholders and cost savings for companies.

For this year's Special Meeting, a number of brokers with account holders who are our stockholders will be "householding" the Proxy Materials. A single set of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be "householding" communications to your address, "householding" will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in "householding" and would prefer to receive a separate set of Special Meeting materials, please notify your broker or us. Direct your written request to Processa Pharmaceuticals, Inc., Attn: Secretary, 601 21^st Street, Suite 300, Vero Beach, FL 32960. Stockholders who currently receive multiple copies of the Special Meeting materials at their addresses and would like to request "householding" of their communications should contact their brokers.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for consideration at the Special Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on such matters in accordance with their best judgment.

Annex A

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Introduction

On July 28, 2026, Processa Pharmaceuticals, Inc. ("Processa" or the "Company") acquired Vidya Therapeutics, Inc. ("Vidya") pursuant to an Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 28, 2026, by and among the Company, Venus Merger Sub I, Inc., a Delaware corporation and a wholly owned subsidiary of the Company ("Merger Sub I"), Venus Merger Sub II, LLC, a Delaware limited liability company and wholly owned subsidiary of the Company ("Merger Sub II"), and Vidya, a Delaware corporation. Also, on July 28, 2026, the transactions contemplated by the Merger Agreement were consummated, pursuant to which Merger Sub I merged with and into Vidya, with Vidya surviving and becoming a wholly owned subsidiary of the Company (the "First Merger"). Immediately following the First Merger, Vidya merged with and into Merger Sub II, with Merger Sub II surviving as a wholly owned subsidiary of the Company and subsequently being renamed Vidya Therapeutics Operating LLC (together with the First Merger, the "Merger"). The Merger is intended to qualify as a tax-free reorganization for U.S. federal income tax purposes.

Under the terms of the Merger Agreement, the Company issued to the stockholders of Vidya an aggregate of 142,254.972 shares of Series A Non-Voting Convertible Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock"), which is inclusive of 37,518.329 shares of Series A Preferred Stock issued for the conversion of previously outstanding Simple Agreements for Future Equity ("SAFE's") issued by Vidya. Each share of Series A Preferred Stock is convertible into 1,000 shares of common stock of the Company, par value $0.00001 per share ("Common Stock"), subject to receiving approval by the Company's stockholders of the issuance of shares of Common Stock upon conversion of Series A Preferred Stock and exercise of certain options held by the former equity holders of Vidya that we assumed in the Merger, which (a) will represent more than 20% of the shares of Common Stock outstanding pursuant to Nasdaq Listing Rule 5635(a) and (b) may, together with certain changes to management and our Board of Directors ("Board"), result in a change of control of the Company pursuant to Nasdaq Listing Rule 5635(b) (the "Conversion Proposal") and certain beneficial ownership limitations set by each holder. In addition, all outstanding options to purchase Vidya common stock were assumed by the Company and were converted into options to purchase an aggregate of 1,047,524 shares of Common Stock (the "Assumed Options").

Concurrently with the Merger, on July 28, 2026, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with investors (the "PIPE Investors") to raise $200.0 million of gross proceeds in which the PIPE Investors were issued an aggregate of 163,774.679 shares of Series A Preferred Stock, or 163,774,679 on an as-converted-to-common basis and without giving effect to any beneficial ownership limitations, (the "PIPE Securities") at a price of $1,221.19 per share, or $1.22 per share on an as-converted-to-common basis, (collectively, the "Financing"). The Financing closed on July 30, 2026.

As a result of the transactions, equityholders of the Company immediately prior to the Merger owned approximately 1.4% of the Common Stock, equityholders of Vidya immediately prior to the Merger owned approximately 46.0% of the Common Stock and investors in the Financing owned approximately 52.6% of the Common Stock, in each case, calculated on a fully-diluted, as-converted-to-common basis (and without giving effect to any beneficial ownership limitations) and based on the implied equity values of the Company and Vidya.

Unaudited Pro Forma Condensed Combined Financial Information

The unaudited pro forma condensed combined financial information is provided for illustrative purposes only, does not necessarily reflect what the actual consolidated results of operations and financial position would have been had the Merger occurred on the dates assumed and may not be useful in predicting the future consolidated results of operations or financial position. The unaudited pro forma condensed combined financial information does not give effect to the potential impact of current financial conditions, regulatory matters, operating efficiencies or other savings or expenses that may result from the Merger.

The unaudited pro forma condensed combined financial information is based on the assumptions and adjustments that are described in the accompanying notes. Accordingly, the pro forma adjustments are preliminary, subject to further revision as additional information becomes available and additional analyses are performed and have been made solely for the purpose of providing unaudited pro forma condensed combined financial information. Differences between the

preliminary accounting and estimates reflected in the unaudited pro forma condensed combined financial information and the final accounting and estimates may occur and these differences could have a material impact on the accompanying unaudited pro forma condensed combined financial information and the combined Company's future results of operations and financial position.

Accounting rules require evaluation of certain assumptions, estimates, or determination of financial statement classifications. During preparation of the unaudited pro forma condensed combined financial information, management has performed a preliminary analysis and is not aware of any material differences, and accordingly, this unaudited pro forma condensed combined financial information assumes no material differences in accounting policies of the two companies. Following the Merger, management will conduct a final review of the Company's accounting policies in order to determine if differences in accounting policies require adjustment or reclassification of Vidya's results of operations or reclassification of assets or liabilities to conform to the Company's accounting policies and classifications. As a result of this review, management may identify differences that, when conformed, could have a material impact on these unaudited pro forma condensed combined financial statements.

The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X under the Securities Act of 1933, as amended (the "Securities Act") and presents the combined historical consolidated financial position and consolidated results of operations of the Company and the historical combined financial position and results of operations of Vidya, adjusted to give effect to (i) the Merger and the Financing and (ii) the pro forma effects of certain assumptions and adjustments described in "Notes to the Unaudited Pro Forma Condensed Combined Financial Information" below. Collectively, pro forma balance sheet transaction accounting adjustments and pro forma statements of operations transaction accounting adjustments are referred to as "transaction accounting adjustments."

The following unaudited pro forma combined financial information is presented to illustrate the estimated effects of the Merger and Financing, based on the historical financial statements and accounting records of the Company and Vidya after giving effect to the Merger and Financing and the related pro forma adjustments as described in the notes included below.

The unaudited pro forma combined statements of operations for the six months ended June 30, 2026 and for the year ended December 31, 2025 combine the historical statements of operations of the Company and Vidya, giving effect to the Merger and Financing as if they had occurred on January 1, 2025. The unaudited pro forma condensed combined balance sheet data assumes that the Acquisition and Financing took place on June 30, 2026, and combines the historical balance sheets of the Company and Vidya as of such date.

The following unaudited pro forma condensed combined financial information and related notes are based on and should be read in conjunction with the following:

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF JUNE 30, 2026

(in thousands)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE SIX MONTHS ENDED JUNE 30, 2026

(in thousands of dollars, except shares and per share amounts)

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2025

(in thousands of dollars, except shares and per share amounts)