v3.26.1
Subsequent Events
12 Months Ended
Dec. 31, 2025
Subsequent Events [Abstract]  
Subsequent Events

Note 21 – Subsequent Events

 

The Company evaluated subsequent events through the date the consolidated financial statements were issued.

 

Debt

 

On January 28, 2026, the Company borrowed $1,500,000 from Kaufman Kapital, pursuant to a Senior Secured Promissory Note (the “Note”). The Note matures on January 28, 2027 and bears interest at a rate of 8% per annum. The Company’s obligations under the Note are secured by a lien on substantially all of the Company’s assets pursuant to a Security Agreement previously entered into in connection with the issuance of the Company’s 12% Senior Secured Convertible Promissory Note dated July 23, 2024. The Note includes customary affirmative and negative covenants and events of default.

 

On January 28, 2026, Kaufman Kapital converted $500,000 of principal outstanding under the Convertible Note into 659,457 shares of the Company’s common stock. Refer to Note 12 – Debt for additional information.

 

Exercise of Warrants

 

On February 24, 2026, warrants were exercised to purchase 37,500 shares of the Company’s common stock at an exercise price of $1.00 per share, resulting in aggregate cash proceeds of $37,500.

 

At-the-Market Offering

 

On January 27, 2026, the Company entered into an At-The-Market Issuance Sales Agreement (the “ATM Agreement”) with Alexander Capital, L.P., as sales agent. Under the ATM Agreement, the Company may offer and sell shares of its common stock from time to time through the sales agent for aggregate gross proceeds of up to $1,500,000. The sales agent is entitled to a commission equal to 3.0% of the gross proceeds of shares sold under the ATM Agreement.

 

 

As of February 13, 2026, the Company had issued and sold 500,000 shares of common stock under the ATM Agreement for aggregate gross proceeds of $1,499,873.

 

Stock-Based Compensation

 

On February 10, 2026, the Compensation Committee of the Board of Directors approved the grant of stock options under the 2022 Plan to directors, employees, and consultants to purchase an aggregate of 1,390,000 shares of the Company’s common stock at an exercise price of $2.96 per share, representing the fair market value of the Company’s common stock on the grant date. All options have a ten-year term.

 

The grants include a combination of time-based and performance-based awards. Time-based options vest over periods of up to 36 months, while certain performance-based options vest upon the Company achieving specified revenue and EBITDA targets. The Company will recognize stock-based compensation expense related to these awards in future periods in accordance with ASC 718. Because these grants were made after December 31, 2025, they did not impact the Company’s consolidated financial statements for the year ended December 31, 2025.

 

Tariff Refund – Gain Contingency

 

On March 4, 2026, the U.S. Court of International Trade ruled that certain tariffs imposed under the International Emergency Economic Powers Act were unlawful. As a result, the Company may be entitled to a refund of tariffs previously paid. As of December 31, 2025, the Company had paid $348,752 of such tariffs. The Company has concluded that recovery of these amounts represents a gain contingency under ASC 450, Contingencies. Accordingly, no receivable or reduction of cost of goods sold has been recognized in the 2025 consolidated financial statements. Any recovery will be recognized when realized or realizable. The timing and amount of recovery remain subject to further legal proceedings and administrative action by U.S. Customs and Border Protection.