12. Common Stock and Warrants

Authorized Shares

The Company’s total number of authorized shares of Common Stock are 30,000,000 since  November 29, 2023 as approved by majority shareholders’ consent.

The shareholders of the Company approved the adoption of the Company’s 2022 Equity Incentive Plan (the “2022 Plan”) providing for the issuance of up to 1,750,000 shares of Common Stock plus outstanding options granted under the Company’s 2012 Stock Option Plan that expire or are forfeited. The 2022 Plan provides various stock awards including incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, which can be awarded to employees and directors of the Company and its subsidiaries.  Subsequent to year end at the Annual Meeting of Shareholders on January 22, 2026 the shareholders approved an amendment to the Company’s 2022 Plan to increase the number of shares of Common Stock available for issuance thereunder to 3,750,000.

Issuance and Sale of Common Stock

2023 Securities Purchase Agreement

On December 13, 2023, the Company entered into a Securities Purchase Agreement (“the 2023 Purchase Agreement”) with certain investors (collectively, the “Investors”) pursuant to which the Investors agreed to subscribe and purchase up to 3,500,000 Units at a price per Unit of $2.00, or an aggregate purchase price of $7,000,000 at which included warrants (the “Warrants”) at an exercise price of $2.50 per share. The Warrants were immediately exercisable and expire five years from their date of issuance. If at any time commencing 12 months from the date of the issuance of a Warrant, but before the expiration of the Warrant, the volume weighted average pricing of the Company’s common stock exceeds $5.00 (subject to adjustment for forward and reverse stock splits, recapitalizations, stock dividends and the like) for each of thirty consecutive trading days, then the Company may, at any time in its sole discretion, call for the exercise of the Warrants, in their entirety.

On January 17, 2024, the Company completed the last closing of its sale of securities pursuant to the 2023 Purchase Agreement discussed above. On this closing, the Company sold an aggregate of 358,388 Units, comprising 358,388 shares of the Company’s common stock and Warrants to purchase 358,388 shares of Common Stock for a total consideration of $716,776. The Company recognized $98,700 of issuance cost, which includes $71,100 attributable to legal and placement agent fees and $27,600 attributable to the fair value of warrants, issued to the placement agent, to purchase up to 17,919 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the purchasers of Units.

2025 Securities Purchase Agreement

On April 18, 2025, the Company entered into a Securities Purchase Agreement (the “April 2025 Purchase Agreement”) with certain investors (each an “April Investors”) pursuant to which the Company sold in a private placement, and the April Investors purchased, an aggregate of 1,550,000 units, which comprised of (i) 1,050,000 shares of the Company’s Common Stock, (ii) pre-funded warrants to purchase 500,000 shares of Common Stock, and (iii) warrants to purchase 1,550,000 shares of Common Stock, for a total consideration of $1,550,000. The Company recognized $97,800 of issuance costs, which was attributable to legal and placement agent fees.

Warrants

In connection with a private placement transaction completed on April 18, 2025, the Company issued 1,050,000 of common stock and 500,000 pre-funded warrants to purchase common stock at an exercise price of $1.00 per share. The warrants are immediately exercisable, have no expiration date and are subject to a beneficial ownerhip limitation of 9.99%.  In October 2025, an additional 125,000 prefunded warrants were issued in connection with warrant exercises under the same terms.The warrants are classified in equity pursuant to ASC 480 and ASC 815-40 as they are indexed to the Company’s own stock and require settlement in a fixed number of shares.

As of December 31, 2025, 625,000 pre-funded warrants remain outstanding.  These warrants are included in both basic and diluted EPS as they are exercisable for nominal amount and are considered common stock equivalents

Replacements Warrants 

On January 17, 2024, certain investors became entitled to receive Replacement Warrants to replace 333,884 Outstanding Warrants, with each Replacement Warrant having a reduced exercise price of such Outstanding Warrants of $2.50 per share and exercisable until the fifth anniversary of the relevant closing under the 2023 Purchase Agreement. The Company measured and recognized a fair value change of $423,800 related to the modification and issuance of the Replacement Warrants, recorded as equity issuance cost in the consolidated statement of changes in Shareholders’ equity for the year ended December 31, 2024.

Underwriter Warrants

As part of its compensation as placement agent for the 2023 Purchase Agreement described above, the Company issued to the placement agent or its designees warrants to purchase up to 157,081 shares of Common Stock at an exercise price of $2.00 per share on substantially the same terms as the Warrants issued to the Investors . The Warrants were valued on each closing grant date, using the Black-Scholes-Merton option pricing model and the Company recognized $645,100 as equity issuance cost in the statement of changes in Shareholders’ equity for the year ended December 31, 2024.

Warrant Summary

The following table summarizes information about shares issuable under warrants outstanding during the years ended December 31, 2025 and 2024, respectively.

Terms of the outstanding warrants as of December 31, 2025 are as follow: