4. EQUITY TRANSACTIONS

REVERSE STOCK SPLITS

Effective as of the close of business on June 6, 2025, with trading on a post-split basis beginning on June 9, 2025, the Company effected a 1-for-8 reverse stock split of its outstanding common stock. As a result of the reverse stock split, each eight shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock. Fractional shares resulting from the reverse stock split were rounded up to the nearest whole share. The number of authorized shares of common stock remained unchanged at 60,000,000 shares following the reverse stock split.

Effective as of the close of business on October 16, 2025, with trading on a post-split basis beginning on October 20, 2025, the Company effected a 1-for-10 reverse stock split of its outstanding common stock. The reverse stock split was implemented in response to the Company’s receipt of a Nasdaq notification regarding noncompliance with the minimum bid price requirement for continued listing. As a result of the reverse stock split, each ten shares of issued and outstanding common stock were automatically combined into one issued and outstanding share of common stock. Fractional shares resulting from the reverse stock split were rounded up to the nearest whole share. Following the reverse stock split, the Company had 6,000,000 authorized shares of common stock.

On February 19, 2026, the Company’s stockholders approved an amendment to the Company’s Articles of Incorporation to increase the number of authorized shares of common stock from 6,000,000 shares to 100,000,000 shares.

All share and per share amounts presented in the accompanying consolidated financial statements and related notes have been retroactively adjusted to reflect both reverse stock splits for all periods presented.

ISSUANCES OF COMMON STOCK AND WARRANTS

Equity Transactions in the Fiscal Year Ended March 31, 2026.

December 2025 Private Placement and Warrant Inducement Agreement

On December 5, 2025, the Company and an institutional investor (the “Purchaser”) entered into a securities purchase agreement (the “Securities Purchase Agreement”), pursuant to which the Company agreed to issue to the Purchaser, in a private placement (the “PIPE Offering”), (i) 595,897 pre-funded warrants to purchase Common Stock (“Pre-Funded Warrants”) and (ii) 1,042,820 warrants to purchase shares of Common Stock at an exercise price of $4.03 per share (the “Common Warrants”). The PIPE Offering closed on December 8, 2025 subject to customary closing conditions. The Common Warrants became exercisable upon stockholder approval and expire five and one-half years following stockholder approval obtained on February 19, 2026.

On January 22, 2026, the Company entered into an amendment to the Securities Purchase Agreement and the Pre-Funded Warrants pursuant to which the Pre-Funded Warrants became immediately exercisable at an exercise price of $0.0001 per share.

At the same time and as part of the PIPE Offering, the Company also entered into a warrant inducement agreement (the “Inducement Agreement”) with the same Purchaser of certain outstanding common stock purchase warrants. Under this agreement, the Purchaser’s existing warrants were modified, including exercise at a reduced price of $4.03 per share for 210,555 shares, and the Purchaser received 368,471 new warrants (the “Inducement Warrants”) to encourage participation in the PIPE.

The modification of the existing warrants and issuance of the Inducement Warrants were accounted for as costs associated with a financing transaction. The new warrants became exercisable on February 19, 2026, have an exercise price of $4.03 per share, and expire five and one-half years following the stockholder approval date.

The Company also issued warrants to buy 23,836 shares of common stock to the placement agent (the “Placement Agent Warrants”) under the Placement Agent Agreement dated December 5, 2025. The Placement Agent Warrants have an exercise price of $5.04 per share and expire five and one-half years following stockholder approval obtained on February 19, 2026.

The securities issued in the PIPE Offering and Inducement Agreement were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder.

The Company filed a Registration Statement on Form S-1 (File No. 333-292598) covering the resale of shares underlying the warrants issued in the PIPE Offering and Inducement Agreement which was declared effective on January 16, 2026. The Company is required to maintain the effectiveness of the registration statement as required under the Registration Rights Agreement and Inducement Agreement. The agreements include customary provisions for liquidated damages if the registration statements are not maintained on time.

Gross proceeds from the PIPE Offering were approximately $3.3 million before placement agent fees and offering costs.

Warrant Exercises

As described above, in connection with the Inducement Agreement, the holder of common stock purchase warrants exercised 210,555 shares of common stock for additional proceeds to the company of $848,537.

September 2025 Registered Direct Offering

On September 4, 2025, we entered into a Securities Purchase Agreement with certain investors pursuant to which it agreed to sell (i) 4,047,780 shares of common stock, (ii) 952,220 pre-funded warrants, and (iii) 5,000,000 common warrants to purchase up to 5,000,000 shares of common stock at an exercise price of $0.90 per share. The securities were offered as part of a registered public offering on Form S-1 (File No. 333-289745), which was declared effective by the SEC on September 4, 2025. The combined public offering price for each share (or pre-funded warrant in lieu thereof) and accompanying common warrant was $0.90 per unit.

The offering closed on September 5, 2025, and we received gross proceeds of approximately $4.5 million and net proceeds of approximately $3.7 million, after deducting placement agent fees and other offering expenses. Maxim Group LLC acted as the exclusive placement agent and received a cash fee of 6.25% of gross proceeds, reimbursement of $100,000 of expenses, and warrants to purchase up to 200,000 shares of common stock at an exercise price of $0.90 per share.

In connection with the offering, the Company and its officers and directors agreed to customary lock-up provisions restricting certain issuances or sales of securities for up to 90 days following the closing.

April 2025 RSU Grants to Independent Directors

In April 2025, our Board of Directors approved, pursuant to the terms of the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the four non-employee directors of the Company then serving on the Board of Directors. The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current non-employee directors then serving on the Board of Directors, and for a grant of stock options or $75,000 worth of RSUs for a newly elected non-employee director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $2.80 per share for the RSUs granted in April 2025. As a result, in April 2025 the four eligible directors were each granted an RSU in the amount of 17,858 shares under the Company’s 2020 Equity Incentive Plan, or the 2020 Plan. The RSUs are subject to vesting in four equal installments, with 25% of the restricted stock units vesting on each of June 30, 2025, September 30, 2025, December 31, 2025, and March 31, 2026, subject in each case to the director’s Continuous Service (as defined in the 2020 Plan), through such dates. Vesting will terminate upon the director’s termination of Continuous Service prior to any vesting date.

Equity Transactions in the Fiscal Year Ended March 31, 2025.

March 2025 Warrant-Based Financing

On March 16, 2025, the Company entered into an inducement offer to exercise existing Class A and Class B Warrants (the “Agreement”) with a certain accredited and institutional holder (the “Holder”) of the Company’s outstanding Class A and Class B Warrants issued on May 17, 2024 (the “Existing Warrants”). Pursuant to the Agreement, the Holder, upon exercise, will receive a new unregistered Common Stock Purchase Warrant (“New Warrant”) pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (“Securities Act”), to purchase up to a number of shares equal to 200% of the number of Warrant Shares issued pursuant to the exercise of Existing Warrants pursuant to this Agreement (the “New Warrant Shares”), which New Warrant shall have an exercise price per share equal to $0.3736, subject to adjustment as provided in the New Warrant, will be exercisable at any time on or after six (6) months from the date of issuance and have a term of exercise of five and one-half (5.5) years from the date of issuance and (ii) a reduction of the exercise price of the Existing Warrants to $0.3736 per share, representing the closing price on March 14, 2025, but only with respect to a cash exercise under the Existing Warrants (as reduced from the current respective exercise price per share as set forth in the Existing Warrants).

The fair value of the new warrants issued and the incremental fair value associated with the modification of the existing warrants totaled approximately $4.6 million and was recorded as a non-cash inducement expense within other expense, with a corresponding increase to additional paid-in capital.

The closing took place on March 17, 2025. Gross proceeds to the Company from the exercise of the Existing Warrants was $2,316,320, prior to deducting closing costs and placement agent fees as further described below. The Company intends to use the net proceeds from the offering for working capital and general corporate purposes.

As a result of the Holder exercising the Existing Warrants, the Company issued an aggregate of 6,200,000 shares of its common stock. The shares underlying the Existing Warrants have all been registered on Form S-1 registration statement (Registration Number 333-278188).

The Company agreed to file a resale registration statement registering the shares underlying the Replacement Warrants (“Resale Registration Statement”) within ninety (90) days of the date of the Agreement and to use commercially reasonable best efforts to cause the Resale Registration Statement to be effective on or prior to the 150th calendar day after the date of the Agreement.

Subject to the terms of the Agreement, the Company will be required to pay certain liquidated damages if the shares underlying the New Warrants are not filed within the ninety (90) period, as more fully described in the Agreement.

The Company further agreed that until sixty (60) days after the closing date of the warrant exercise, it will not (other than in connection with limited enumerated exceptions) issue, enter into any agreement to issue or announce the issuance or proposed issuance of any shares of common stock or common stock equivalents or file any registration statement or any amendment or supplement (other than the registration statement registering the shares underlying the Replacement Warrants).

In connection with the transactions contemplated in the Agreement, the Company agreed to pay its placement agent, Maxim Group, LLC (the “Agent”) the following compensation, (i) a cash fee equal to 6.0% of the gross proceeds received by the Company in the transactions contemplated by the Agreement, and (ii) legal fees and out-of-pocket expenses of $15,000.

May 2024 Public Offering

On May 17, 2024, the Company closed a public offering pursuant to which it sold an aggregate of: (i) 306,250 shares of common stock and accompanying Class A warrants to purchase up to 306,250 shares of common stock and Class B warrants to purchase up to 306,250 shares of common stock, at a combined public offering price of $4.64 per share and accompanying warrants; and (ii) in lieu of common stock, pre-funded warrants to purchase 706,250 shares of common stock and accompanying Class A warrants to purchase up to 706,250 shares of common stock and Class B warrants to purchase up to 706,250 shares of common stock, at a combined public offering price of $4.63 per pre-funded warrant and accompanying warrants, which is equal to the public offering price per share of common stock, and accompanying warrants less the $0.001 per share exercise price of each such pre-funded warrant.

All pre-funded warrants issued in the offering were exercised in the quarter ended June 30, 2024. The Class A and Class B warrants each have an exercise price of $4.64 per share, are immediately exercisable, and, in the case of Class A warrants, will expire on May 17, 2029, and in the case of Class B warrants, will expire on May 19, 2025. The exercise price of the Class A and Class B warrants is also subject to adjustment for stock splits, reverse splits, and similar capital transactions as described in such warrants.

Maxim Group LLC (“Maxim”), served as the exclusive placement agent in connection with the offering. We paid Maxim a cash fee of 6.5% of the aggregate gross proceeds raised at the closing of the offering, and reimbursement of certain expenses and legal fees in the amount of $100,000. We also issued to designees of Maxim warrants to purchase up to an aggregate of 40,500 shares of common stock (the “Placement Agent Warrants”). The Placement Agent Warrants have an exercise price of $4.64 per share and have substantially the same terms as the Class A warrants, except the Placement Agent Warrants are not subject to an exercise price reset, are non-exercisable until November 15, 2024, and will expire on May 15, 2029.

The gross proceeds from the offering, before deducting the placement agent’s fees and other offering expenses, were approximately $4.7 million. Net proceeds, of the offering, after deducting the placement agent fees and expenses and other offering expenses payable by us, were approximately $3.5 million. In June 2024, and holders of Class A and Class B warrants exercised 37,500 shares and 360,000 shares, respectively, for additional proceeds of $1,844,400.

The shares of Common Stock, the Class A and Class B warrants, the pre-funded warrants and the Placement Agent Warrants described above and the underlying shares of Common Stock were offered pursuant to a Registration Statement on Form S-1, as amended (File No. 333-278188) (the “Registration Statement”), which was declared effective by the Securities and Exchange Commission (the “SEC”) on May 15, 2024.

RSU Grants to Non-Employee Directors

On April 17, 2024, the Compensation Committee of the Board, or Compensation Committee, approved, pursuant to the terms of the Company’s Amended and Restated Non-Employee Director Compensation Policy, or the Director Compensation Policy, the grant of the annual RSUs under the Director Compensation Policy to each of the four non-employee directors of the Company then serving on the Board of Directors of the Company, or Board. The Director Compensation Policy provides for a grant of stock options or $50,000 worth of RSUs at the beginning of each fiscal year for current non-employee directors then serving on the Board, and for a grant of stock options or $75,000 worth of RSUs for a newly elected non-employee director, with each RSU priced at the average for the closing prices for the five days preceding and including the date of grant, or $12.16 per share for the April 2024 RSU grants. As a result, in April 2024 the four eligible directors were each granted an RSU in the amount of 4,112 shares under the 2020 Plan. The RSUs are subject to vesting in four equal installments, with 25% of the restricted stock units vesting on each of June 30, 2024, September 30, 2024, December 31, 2024, and March 31, 2025, subject in each case to the director’s Continuous Service (as defined in the 2020 Plan), through such dates. Vesting will terminate upon the director’s termination of Continuous Service prior to any vesting date.

There were no vested RSUs outstanding as of March 31, 2025.

WARRANTS:

During the fiscal year ended March 31, 2026, warrant activity primarily related to warrants issued in connection with the Company’s September 2025 public offering and the Company’s December 2025 PIPE and warrant inducement transaction. During the twelve-months ended March 31, 2026, we issued 520,000 warrants in connection with the September 2025 public offering and 1,435,126 in connection with a December 2025 PIPE and warrant inducement transaction. In addition, 210,555 warrants were exercised in connection with the December 2025 transaction and 22,793 warrants expired unexercised during the year. As of March 31, 2026, a total of 1,957,490 warrants were outstanding and exercisable at a weighted average exercise price of $6.48 per share.

A summary of the aggregate warrant activity for the years ended March 31, 2026 and 2025 is presented below:

The detail of the warrants outstanding and exercisable as of March 31, 2026 is as follows:

The detail of the warrants outstanding and exercisable as of March 31, 2025 is as follows:

STOCK-BASED COMPENSATION:

2020 EQUITY INCENTIVE PLAN

The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by our stockholders in September 2020 and has subsequently been amended from time to time with stockholder approval to increase the number of shares available for issuance. The 2020 plan permits the issuance of stock options, restricted stock units (RSUs), stock bonuses, stock appreciation rights, and other equity awards to employees, directors and consultants. As of March 31, 2026, 132,109 shares remained available for issuance under the 2020 Plan.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

The Company maintains the Director Compensation Policy which provides for cash and equity compensation for persons serving as non-employee directors of the Company. Under this policy, each new non-employee director receives either stock options or a grant of RSUs upon appointment/election, as well as either an annual grant of stock options or of RSUs at the beginning of each fiscal year. The (i) stock options are subject to vesting and (ii) RSUs are subject to vesting and represent the right to be issued on a future date shares of our common stock upon vesting.

Please see above under the heading “Equity Transactions in the Fiscal Year Ended March 31, 2026—RSU Grants to Non-Employee Directors” for disclosure regarding equity awards under the Director Compensation Policy during the fiscal year ended March 31, 2026.

STOCK OPTION ACTIVITY

During the fiscal years ended March 31, 2026 and March 31, 2025, we did not issue stock option grants.

Options outstanding that were vested as of March 31, 2026 and options that are expected to vest subsequent to March 31, 2026 are as follows:

The following is a summary of the stock options outstanding at March 31, 2026 and 2025 and the changes during the years then ended:

There were no stock option grants during the fiscal years ended March 31, 2026 or March 31, 2025. There were 7,143 RSUs granted during the fiscal year ended March 31, 2026. The weighted average grant date fair value of RSUs granted during the fiscal year ended March 31, 2026 was $50,000. There were no stock option exercises during the fiscal years ended March 31, 2026 and 2025.

The table below summarizes nonvested stock options as of March 31, 2026 and changes during the year ended March 31, 2026.

The detail of the options outstanding and exercisable as of March 31, 2025 is as follows:

We recorded stock-based compensation expense related to RSU issuances and to options granted totaling $278,547 and $415,234 for the fiscal years ended March 31, 2026 and 2025, respectively. These expenses were recorded as stock compensation included in payroll and related expenses in the accompanying consolidated statement of operations for the years ended March 31, 2026 and 2025.

The table below presents a summary of restricted stock unit activity as of March 31, 2026, and for the year then ended.

Our total stock-based compensation for fiscal years ended March 31, 2026 and 2025 included the following:

We review share-based compensation on a quarterly basis for changes to the estimate of expected award forfeitures based on actual forfeiture experience. The cumulative effect of adjusting the forfeiture rate for all expense amortization is recognized in the period the forfeiture estimate is changed. The effect of forfeiture adjustments for the fiscal year ended March 31, 2026 was insignificant.

On March 31, 2026, our outstanding stock options had no intrinsic value since the closing price on that date of $2.19 per share was below the weighted average exercise price of our outstanding stock options.

At March 31, 2026, there was no unrecognized compensation cost related to share-based payments.