Note 7 – Stockholder’ Equity

The Company is authorized to issue 50,000,000 preferred stock shares and 1,000,000,000 common stock shares both with a par value of $0.0001.

Preferred Stock

On October 30, 2020, the Company designated 1,000,000 shares of preferred stock as Series D Convertible Preferred Stock with a par value of $0.0001.

At March 31, 2026 and December 31, 2025, there were no shares of preferred stock issued and outstanding. 

Issuance of Stock for Services

During the three months ended March 31, 2026, we issued 1,461 fully vested shares of restricted common stock to service providers with a fair value of $4,000 based on the closing market price of our common stock on date of grant.

During the three months ended March 31, 2025, we issued 18,099 fully vested shares of restricted common stock to service providers with a fair value of $66,900 based on the closing market price of our common stock on date of grant.

Common Stock for Stock Option Exercises

During the three months ended March 31, 2026, we issued an aggregate of 184,051 shares of common stock for two cashless stock option exercises. One of the exercises was our current Chief Executive Officer who was issued 60,000 shares of common stock upon the cashless exercise.

During the three months ended March 31, 2025, we issued 20,000 shares of common stock for a stock option exercise that resulted in cash proceeds of $24,000.

Issuance of Restricted Common Stock

During the three months ended March 31, 2026, we issued 166,221 shares of common stock to executives and employees for vested restricted stock awards. No such awards were issued during the three months ended March 31, 2025.

Stock-based compensation

2021 Plan

The Company has reserved 3,615,000  shares of common stock or common stock equivalents to be issued under our 2021 Equity Incentive Plan (the “2021 Plan”) to the Company’s employees and non-employee services providers. Stock options granted under the 2021 Plan typically have a contractual term of ten years.

Stock-based compensation expense related to the stock options and restricted stock units expected to vest is presented as follows on the condensed consolidated statements of operations:

Stock Options

Stock option activity for the three months ended March 31, 2026 is summarized as follows: 

*At March 31, 2026 and December 31, 2025, the options outstanding and exercisable include 0 and 300,000 granted in connection with a merger that occurred in 2021, respectively, which were not granted under the 2021 Plan. The 300,000 options were exercised on a cashless basis during the three months ended March 31, 2026. Further, at March 31, 2026 and December 31, 2025, the options outstanding and exercisable include 27,500 of options granted in 2024 pursuant to a legal settlement and were not granted under the 2021 Plan.

Intrinsic value is based on the difference between the option exercise price and the quoted closing market price at March 31, 2026 or the date of option exercise.

Of the total options outstanding at March 31, 2026, 91,894 of the options include performance conditions. The performance-based options vest as follows: 50% vest upon the achievement of operating profit, as defined in the employment agreements, and 50% upon the achievement of a revenue target of $100 million by the end of fiscal year 2028. The performance-based options with the revenue target begin vesting once the Company achieves $15 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of options that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the restricted stock units with the revenue performance condition will vest on January 31, 2027.

At March 31, 2026, total unrecognized compensation expense for service based and performance-based options was $940,200 and $276,721, respectively. The unrecognized service-based expense will be recognized over a weighted-average period of 1.64 years. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met.

During the three months ended March 31, 2025, 90,860 common stock options were granted with a weighted average exercise price of $6.59 and grant-date fair value of $3.32. 

During the three months ended March 31, 2026, we issued an aggregate of 184,051 shares of common stock for two cashless stock option exercises.

During the three months ended March 31, 2025, 20,000 stock options issued outside of the 2021 Plan were exercised with an exercise price of $1.20 for total proceeds to the Company of $24,000.

The fair value of the options granted during the three months ended March 31, 2025 were estimated on the date of grant, using the Black-Scholes option-pricing model with the following assumptions:

Restricted Stock Units (“RSUs”)

At March 31, 2026, our unvested RSUs consist of 273,721 RSUs with time-based vesting provisions granted to executives, non-executives and non-employee directors, and 141,895 RSUs with performance-based vesting provisions. The performance-based unvested RSUs were granted to two current executive officers in prior periods.  

A summary of our outstanding unvested time-based RSUs during the three months ended March 31, 2026 is as follows:

At March 31, 2026, we have $635,149 of unrecognized stock-based compensation associated with the RSUs with a performance condition which will be recognized when the performance conditions are probable of being met. As of March 31, 2026, the Company had $1,177,381 of unrecognized stock-based compensation associated with the time-based vesting RSUs which will be recognized over a weighted-average vesting period of approximately 2.32 years.

Stock Warrants

A summary of warrant activity for the three months ended March 31, 2026, is as follows: