Note 9 — Warrants

Warrants are issued to consultants as compensation or as part of certain capital raises which entitle the holder to purchase shares of the Company’s Common Stock at a fixed price. The strike price of warrants granted in 2022 were set when the Company completed the IPO pricing agreement with the Company’s underwriters on October 9, 2023, which was $5.00.

July 2025 Warrant Exchange Agreements

During July 2025, the Company entered into two warrant exchange agreements (the “Exchange Agreements”) with two holders of previously issued equity classified warrants to purchase shares of the Company’s Common Stock (one Exchange Agreement was entered into with the Company’s Chief Executive Officer. The terms of the Exchange Agreement provided each holder with 750 newly issued shares of the Company’s Common Stock, in exchange for the settlement and cancellation of their outstanding warrants. As of the dates of the Exchange Agreements, the outstanding warrants provided the holders with the right to purchase an aggregate of 3,703,704 shares of the Company’s Common Stock at a per share exercise price of $0.135.

Upon the respective settlement dates in July 2025, the Company measured the fair value of the newly issued shares of the Company’s Common Stock issued as consideration to be approximately $1.1 million. Just prior to their settlement and cancellation, the Company estimated the fair value of the Warrants to be approximately $28.0 million. The fair value of the Warrants prior to cancellation was estimated using the Black-Scholes valuation model with the following inputs: Company stock prices of $7.40 to $7.99; exercise prices of $0.135, remaining term to maturity of 2.3 to 2.4 years, risk-free rates of 3.9% and stock

price volatility of 65.0%.

As the difference between the fair value of the Warrants settled ($28.0 million) and the fair value of the shares of Common Stock issued ($1.1 million) was favorable to the Company, no recognition of this change is required in the Company’s consolidated financial statements.

Warrants are issued to consultants as compensation or as part of certain capital raises which entitle the holder to purchase shares of the Company’s common stock at a fixed price. As of December 31, 2025, the Company’s stock price was $6.34.

2022 Warrant Exchange Agreements 

Warrants issued to two investors who loaned money to the Company, Emmis Capital II, LLC and the Company’s CEO, Joseph La Rosa, on November 14, 2022 and December 2, 2022, respectively, included full ratchet antidilutive protections. The original warrants each covered 50,000 shares at a strike price of $5.00. By the end of 2024, due to various debt and equity transactions the new strike price on these warrants became $0.37, resulting in the number of shares covered by each warrant to increase to 667,913 and a 2024 deemed dividend of $1,476,044.

In the first half of 2025, the warrants were revalued due to equity transactions triggering the ratchet antidilutive protections bringing the strike price of these warrants down to $0.14 resulting in the number of shares covered by each warrant to increase to 1,851,852, and a 2025 deemed dividend of $275,264. In addition, on August 7, 2024, the Company, entered into a securities purchase agreement with an institutional accredited investor, Brown Stone Capital Ltd., pursuant to which the Company agreed to issue up to 3,051,336 shares of the Company’s common stock, and/or pre-funded warrants to purchase shares of common stock, at $0.59 per share. The discount related to the shares purchased by Brown Stone resulted in a deemed dividend of $434,163. Pursuant to this agreement, on August 12, 2024, the Company issued 95 shares of common stock. In accordance with the full ratchet antidilutive terms tied to Emmis Capital II, LLC and Joseph La Rosa’s warrants, the warrants were adjusted to reflect the strike price of the common stock issued to Brown Stone Capital Ltd., and the number of shares covered by each of the warrants increased to 847,458, in the aggregate. The difference in the fair value between each warrant immediately before and after the trigger was, in aggregate, $485,876, which is considered a deemed dividend. These two transactions increased the basic net loss per share for common stockholders for the year ended December 31, 2024.

At December 31, 2025, warrants outstanding that have vested and are expected to vest are as follows:

Additional information with respect to warrant activity:

During 2023 the Company issued warrants to purchase 6 shares of Common Stock to the Company’s underwriter as compensation for providing services to complete the Company’s IPO. The warrants vested on April 2, 2024 and have a term of five years from the grant date with an exercise price of $44,000. The warrants are freestanding instruments in a bundled transaction with the IPO and are accounted for separately. The Company determined that the warrants are classified as equity.

Warrants related to 2024 Senior Secured Notes Payable

On February 20, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note. As part of the transaction, the Company issued two warrants, the first gave the investor the option to purchase 15 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date.

On April 1, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note. As part of the transaction, the Company issued two warrants, the first gives the investor the option to purchase 19 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date.

On July 15, 2024, the Company entered into a securities purchase agreement with an accredited investor for the issuance of a senior secured promissory note. As part of the transaction, the Company issued two warrants, the first gives the investor the option to purchase 7 shares of the Company’s common stock with an exercise price of $24,000, exercisable until the five-year anniversary of the closing date.

During the first half of 2025, the Company settled all vested and outstanding warrants previously held by the accredited investor holding the three senior secured notes payable from 2024 mentioned above. Two of the three warrants were exercised on a cashless basis for a total of 2 shares of common stock which represented 1,392,198 warrants. The remaining warrant was repurchased by the Company for $379,083 in cash on January 24, 2025, resulting in the elimination of all vested warrants (1,202,244 warrants) held by the investor as of March 31, 2025.

Under an agreement between the Company and the Company’s underwriter, Alexander Capital, the Company issued a warrant to Alexander Capital as a result of the issuance of the promissory note on February 20, 2024. The holder of the warrant had the right to purchase 3 shares of the Company’s common stock with an exercise price of $12,000, exercisable until the five-year anniversary of the grant date.

During the fiscal years ended December 31, 2025 and 2024, there was no unrecognized expense related to warrants. There was no unrecognized amortization of financing fees related to warrants in 2025 or 2024.

The valuation methodology used to determine the fair value of the warrants was the Black-Scholes option-pricing model. The Black-Scholes model requires the use of a number of assumptions including volatility of the stock price, the average risk-free interest rate, and the weighted average expected life of the warrant.

Estimated volatility is a measure of the amount by which the Company’s stock price is expected to fluctuate each year during the expected life of the award. The Company’s estimated volatility is an average of the historical volatility of peer entities over the shorter of i) the period equal to the expected life of the award or ii) the period over which the peer company was publicly traded. The Company uses the historical volatility of peer entities due to the lack of sufficient historical data of its stock price.

The risk-free interest rate assumption is based upon observed interest rates on zero coupon U.S. Treasury bonds whose maturity period is appropriate for the term of the award at the grant date.

The weighted average fair value of warrants granted and the assumptions used in the Black-Scholes model are set forth in the table below.