Note 11 – Stockholders’ Equity (Deficiency)

Increase of 2018 Omnibus Stock Incentive Plan Shares

On January 21, 2025, the stockholders approved an amendment to the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan to reserve an additional 350,000 shares of the Company’s common stock for issuance thereunder, which number of shares was not adjusted to reflect the Reverse Split.

At-The-Market Offering

During the three and six months ended June 30, 2025, the Company received approximately $2.6 million and $8.2 million, respectively, in net proceeds from the sale of 1,323,389 and 2,450,489 shares of its common stock pursuant to the sales agreement with Chardan Capital Markets, LLC (“Chardan”) in its “at-the-market” offering.

Stock-Based Compensation Expense

The Company records stock-based compensation expense related to stock options and restricted stock units (“RSUs”). For the three and six months ended June 30, 2025, the balance in selling, general and administrative includes the expense of $5,190,000 resulting from the accrued inducement grant (see Note 7 – Accrued Inducement Grant). For the three months and six months ended June 30, 2025 and 2024, the Company recorded stock-based compensation expense allocated as follows:

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Restricted Stock Units

A summary of the restricted stock units (“RSUs”) activity during the six months ended June 30, 2025 is presented below:

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RSUs have been granted to directors, employees and contractors in accordance with the Company’s Amended and Restated 2018 Omnibus Stock Incentive Plan. Some RSUs are subject to delayed delivery of the shares underlying the vested RSUs until the termination of grantee service. As of June 30, 2025, there was $267,838 of unrecognized stock-based compensation expense related to RSUs which will be recognized over a weighted average period of 0.7 years.

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June 2025 Series A Preferred Stock Securities Purchase Agreement

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On June 17, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with institutional accredited investors whereby the Company offered units consisting of a share of Series A Non-Voting Convertible Preferred Stock (“Series A Preferred Stock”) and a warrant to purchase six shares of common stock. On June 20, 2025, the closing date, the investors were issued an aggregate of 5,128,205 shares of Series A Preferred Stock at a price of $9.75 per share for aggregate consideration of $50,000,000. Each share of Series A Preferred Stock is convertible into three shares of common stock. The Series A Preferred Stock has a par value of $0.0001 per share. Additionally, the Investors were issued five-year warrants exercisable into an aggregate of 30,769,230 shares of common stock at an exercise price of $3.25 per share exercisable beginning on December 21, 2025.

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On June 20, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations to provide for the designation of 5,435,898 shares of Series A Preferred Stock. The key features of the Series A Preferred Stock are that it (a) is convertible into common stock at the option of the holder at $3.25 per share; (b) accrues quarterly cumulative dividends at 6% per annum payable in cash or common stock at the Company’s option; (c) participates in declared and paid cash common stock dividends; (d) is non-voting except for certain protective covenants; and (e) has a liquidation preference of $50,097,167 as of June 20, 2025, equal to the original purchase price, plus any accrued and unpaid dividends.

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The Company incurred cash issuance costs of $634,251 in connection with the Purchase Agreement. In addition, the placement agent as compensation for its services, received securities valued at $3.0 million, consisting of 307,692 shares of Series A Preferred Stock and five-year warrants to purchase 1,846,153 shares of common stock at an exercise price of $3.25 per share exercisable beginning on December 21, 2025.

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The Company determined that the Series A Preferred Stock, plus the investor and placement agent warrants, qualified to be equity classified.

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Warrants

During the quarter ended March 31, 2025, the Company entered into an inducement offer (the “Inducement Offer”) with an investor (the “Investor”), by which the Company agreed to reduce the exercise price of existing warrants to purchase 197,118 shares of common stock (“the Existing Warrants”) from $55.20 per share to $5.272 per share. These warrants were immediately exercised for net proceeds to the Company of approximately $0.9 million. Cash issuance costs were $116,456. The Inducement Offer also required the Company to issue to the Investor Series A Common Stock Purchase Warrants and Series B Common Stock Purchase Warrants (together the “Additional Warrants”) to purchase an aggregate of 394,236 shares of common stock at an exercise price of $5.272 per share, which may be exercised for five years from the initial exercise date. The Additional Warrants become exercisable upon stockholder approval.

Modification accounting was only performed on the warrants that were actually exercised pursuant to the Inducement Offer as it represented a short-term inducement. The Company recognized the $1,194,102 modification date incremental value of the modified Existing Warrants and Additional Warrants issued as compared to the original Existing Warrants, as an issuance cost of the warrant exercise.

The table below presents the assumptions that were used before and after the modification date. There was no warrant activity other than on the modification date and there was no warrant activity in the six months ended June 30, 2024. The following inputs were utilized to value the warrants for the Inducement Offer:

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A summary of the warrant activity during the six months ended June 30, 2025 is presented below:

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The following table presents information related to warrants as of June 30, 2025:

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