Note 9. STOCKHOLDERS’ EQUITY

2026 Transactions

Consulting Agreement

On January 13, 2026, the Company issued 1,224,489 shares of its common stock to Hudson Global Ventures, LLC as consideration for consulting services rendered to the Company. The fair value of the shares, determined based on the closing market price of $0.42 per share on the date of issuance, was $514,285, which was recognized as consulting expense within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026.

Settlement Agreement

On January 28, 2026, the Company entered into a Settlement Agreement and Stipulation with Silverback Capital Corporation (“Silverback”), which was approved by the Circuit Court of the Twelfth Judicial Circuit in and for Desoto County, Florida on February 4, 2026, pursuant to Section 3(a)(10) of the Securities Act of 1933. Under the terms of the settlement, the Company agreed to issue shares of its common stock to Silverback, the proceeds from the resale of which were applied to satisfy certain outstanding obligations of the Company, including vendor payables and notes payable.

Pursuant to the settlement, the Company issued shares to Silverback in three tranches. On February 12, 2026, the Company issued 2,340,000 shares at an agreed settlement price of $0.25 per share, for a total settlement value of $585,000. The fair value of the shares on the date of issuance, based on the closing market price of $0.28 per share, was $655,200. On March 9, 2026, the Company issued an additional 4,126,000 shares at an agreed settlement price of $0.25 per share, for a total settlement value of $1,031,500. The fair value of the shares on the date of issuance, based on the closing market price of $0.17 per share, was $701,420. The aggregate carrying amount of the obligations settled through these two tranches exceeded the aggregate fair value of the shares issued, resulting in a net gain on debt extinguishment of $259,880, which is included in other income in the condensed consolidated statements of operations for the three months ended March 31, 2026.

On March 23, 2026, the Company issued an aggregate of 400,000 shares of its common stock to Silverback in two components — 100,000 shares as consideration for settlement fees and 300,000 shares as consideration for legal fees incurred in connection with the settlement arrangement. The fair value of the shares was determined based on the closing market price of $0.13 per share on the date of issuance, resulting in settlement fees of $13,000 recognized within other expenses and legal fees of $39,000 recognized within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026.

Accrued Compensation Settlement

On March 18, 2026, the Board of Directors approved the settlement of accrued compensation obligations owed to Suren Ajjarapu and Prashant Patel through the issuance of equity securities. Pursuant to the settlement, the Company issued 5,000,000 shares of common stock to each of Mr. Ajjarapu and Mr. Patel, for an aggregate of 10,000,000 shares, together with five-year warrants to purchase 5,000,000 shares of common stock issued to each individual, for an aggregate of 10,000,000 warrants exercisable at $0.01 per share. The shares were issued on March 31, 2026 pursuant to Section 4(a)(2) of the Securities Act of 1933.

The fair value of the shares on the date of issuance, based on the closing market price of $0.13 per share, was $1,300,000 in aggregate. The fair value of the warrants was $1,289,580 in aggregate, determined using the Black-Scholes option pricing model with the following assumptions: stock price of $0.13, exercise price of $0.01, expected term of 5 years, annualized volatility of 186.0%, risk-free interest rate of 3.87%, and no expected dividends.

The aggregate fair value of the equity consideration issued of $2,589,580 was applied to settle accrued payroll expenses of $1,666,667 and accrued bonus of $333,333. The excess of the fair value of equity issued over the carrying amount of the obligations settled of $589,580 was recognized as stock-based compensation expense within general and administrative expenses in the condensed consolidated statements of operations for the three months ended March 31, 2026. The transaction was entirely non-cash.

2025 Transactions

Initial Public Offering

On February 24, 2025, the Company closed its initial public offering of 888,889 shares of common stock at a public offering price of $4.50 per share, generating gross proceeds of $4.0 million and net proceeds of approximately $3.1 million after deducting underwriting discounts, commissions, and other offering expenses.

Consulting Agreements

On February 25, 2025, the Company issued 52,000 shares of restricted common stock to Hudson Global Ventures, LLC as consideration for consulting services. The fair value of the shares, determined based on the closing market price on the grant date, was $143,520, which was recognized as stock-based compensation expense within general and administrative expenses for the three months ended March 31, 2025.

On March 17, 2025, the Company issued 100,000 shares of restricted common stock to Draper, Inc. pursuant to a consulting agreement for investor relations and business development services. The total fair value of the shares was $400,000, of which $65,217 was recognized as stock-based compensation expense within sales and marketing expenses for the three months ended March 31, 2025. The remaining $334,783 was recorded as prepaid expenses as of March 31, 2025.

2023 Equity Incentive Plan

The Company adopted the 2023 Equity Incentive Plan (the “Plan”), which provides the issuance of up to 43,506,064 shares of the Company’s common stock (the “Initial Limit”). Beginning on January 1, 2025, and on each January 1 thereafter, the number of shares reserved for issuance under the Plan will automatically increase by an amount equal to three percent (3%) of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31, or such lesser amount as may be determined by the Plan’s administrator (the “Annual Increase”). Shares issued under the Plan may be newly issued shares or reacquired shares.

The Plan permits the grant of various types of stock-based awards, including incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares available for issuance as incentive stock options may not exceed the Initial Limit, as adjusted for any Annual Increases, subject to adjustment as provided under the terms of the Plan.

Shares subject to awards that expire, are canceled, or otherwise terminate without having been exercised or settled in full will again become available for future grant under the Plan. However, shares repurchased by the Company on the open market will not be added back to the share reserve. Awards that may be settled solely in cash do not count against the share reserve.

The Plan also includes a limitation on annual compensation to non-employee directors. The aggregate value of all equity awards granted to any non-employee director under the Plan, together with any cash compensation paid for service as a non-employee director, may not exceed (i) $1,000,000 in the first calendar year of service and (ii) $750,000 in any subsequent calendar year. The fair value of such awards is determined based on grant date fair value in accordance with ASC Topic 718, excluding the impact of estimated forfeitures related to service-based vesting conditions.

Restricted Common Stock

On February 4, 2026, the Company granted 200,000 shares of restricted common stock to a newly appointed director under the Plan, vesting in equal annual installments over a three-year period. The grant date fair value of the award was $68,000, determined based on the closing market price of $0.34 per share on the date of grant. In addition, the newly appointed director is entitled to an annual cash retainer of $120,000, payable quarterly in arrears, and an annual equity award of 60,000 shares of common stock under the Plan, issuable in arrears following the end of each calendar year. For the three months ended March 31, 2026, the Company accrued director compensation of $20,000 related to the cash retainer, included within accrued expenses and other liabilities in the condensed consolidated balance sheets, and recognized stock-based compensation expense of $3,400 related to the annual equity award, included within general and administrative expenses in the condensed consolidated statements of operations.

A summary of restricted common stock activity for the three months ended March 31, 2026 and 2025 is as follows:

SCHEDULE OF RESTRICTED COMMON STOCKS 

For the three months ended March 31, 2026, the Company recognized stock-based compensation expense of $198,499 related to restricted stock awards, included within general and administrative expenses in the condensed consolidated statements of operations. For the three months ended March 31, 2025, the Company recognized stock-based compensation expense of $27,229,902 related to restricted stock awards, which included $27,021,165 attributable to the immediate vesting of 9,363,617 shares granted on March 14, 2025.

As of March 31, 2026, total unrecognized compensation expense related to unvested restricted stock awards was $1,560,886, which is expected to be recognized over a weighted-average remaining period of 1.59 years.

Warrants

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

SCHEDULE OF WARRANT ACTIVITY 

On January 20, 2026, the Company issued 1,097,640 warrants to the placement agent and its designees in connection with the convertible note offering at an exercise price of $0.41 per share, expiring January 20, 2031. The fair value of these warrants and the related Black-Scholes assumptions are disclosed in Note 8.

On March 18, 2026, the Company issued an aggregate of 10,000,000 warrants to Suren Ajjarapu and Prashant Patel in connection with the settlement of accrued compensation obligations, exercisable at $0.01 per share and expiring March 18, 2031. The fair value of the warrants was determined using the Black-Scholes option pricing model with the following assumptions:

SCHEDULE OF FAIR VALUE OF WARRANTS 

Fair value of warrants $0.13 per warrant and an aggregate fair value of $1,289,580. As of March 31, 2026, all outstanding warrants were exercisable with a weighted average remaining contractual term of approximately 4.82 years.