STOCKHOLDERS’ DEFICIT |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| STOCKHOLDERS’ DEFICIT | NOTE 6 – STOCKHOLDERS’ DEFICIT
General
The following description of the Company’s capital stock and certain provisions of its amended and restated certificate of incorporation and amended and restated bylaws are summaries and are qualified in their entirety by reference to such documents, copies of which have been previously filed with the Securities and Exchange Commission. The summary below should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.
Preferred Stock
Common Stock
Common shares transactions
February 2026 public offering
On February 9, 2026, the Company completed a public offering of shares of common stock together with Series A-1 warrants to purchase 7,142,858 shares and Series A-2 warrants to purchase 7,142,858 shares of common stock, each at an exercise price of $0.70 per share. In connection with the offering, the Company also issued to the placement agent warrants to purchase an aggregate of 557,058 shares of common stock with a five-year term at exercise prices of $0.875 and $3.2375 per share, with an aggregate fair value of $381,374. Gross proceeds from the offering were $5,000,001. The Company received net proceeds of approximately $
The Company evaluated the Series A-1, A-2, and placement agent warrants under ASC 815, Derivatives and Hedging, including ASC 815-40 related to contracts in an entity’s own equity, and concluded that such warrants qualify for equity classification. Accordingly, the fair value assigned to the warrants was recorded within stockholders’ equity at issuance and is not subsequently remeasured through earnings. Offering costs and selling concessions associated with the offering were recorded as reductions of additional paid-in capital.
Common stock issued upon exercise of warrants
During the three months ended March 31, 2026, holders exercised an aggregate of previously issued Series A-1 and Series A-2 warrants associated with the Company’s February 2026 public offering at an exercise price of $0.70 per share, resulting in the issuance of shares of common stock and aggregate proceeds of $753,091. Because such warrants were classified within stockholders’ equity, no gain or loss was recognized upon exercise and the Company recorded the issuance of common stock and the related additional paid-in capital.
Warrant Inducement Offering
On March 15, 2026, the Company entered into inducement agreements with certain holders of existing warrants originally issued in September 2025 at an exercise price of $3.40 per share (collectively, the “Existing Warrants”), pursuant to which such holders agreed to exercise an aggregate of 1,373,630 Existing Warrants at a reduced exercise price of $1.08 per share, resulting in gross proceeds of $1,483,520. The Company received net proceeds of $1,273,724 after deducting placement agent fees, legal expenses, and other transaction costs of $209,796, which were recorded as reductions of additional paid-in capital.
In connection with the inducement transactions, the Company issued to the exercising holders (i) Series A-3 Common Stock purchase warrants to purchase an aggregate of 1,373,630 shares of Common Stock at an exercise price of $1.08 per share, with a term of five years, and (ii) Series A-4 Common Stock purchase warrants to purchase an aggregate of 1,373,630 shares of Common Stock at an exercise price of $1.08 per share, with a term of eighteen months (collectively, the “New Warrants”). The Company also issued to the placement agent warrants to purchase an aggregate of 96,154 shares of Common Stock at an exercise price of $1.35 per share, with a five-year term.
The Company evaluated the New Warrants and placement agent warrants under ASC 815, Derivatives and Hedging, including ASC 815-40 related to contracts in an entity’s own equity, and concluded that such warrants qualify for equity classification. Accordingly, the fair value of the New Warrants was recorded within stockholders’ equity at issuance and will not be subsequently remeasured through earnings. The fair value of the New Warrants of $2,439,159 was recognized within stockholders’ equity.
The Existing Warrants exercised in connection with the inducement were previously classified within stockholders’ equity. Accordingly, no gain or loss was recognized upon exercise. The deemed dividend of $1,512,480 represents the excess of the fair value of the consideration received by the exercising holders — consisting of the Series A-3 and A-4 warrants with an aggregate fair value of $2,439,159 — over the fair value of the Existing Warrants surrendered of $926,679, measured at the inducement date in accordance with ASC 260-10-45.
Shares issued upon exercise of warrants
During the three months ended March 31, 2026, the Company received aggregate proceeds of $753,091 from the exercise of 1,075,844 warrants into an equal number of shares of common stock at an exercise price of $0.70 per share.
Shares issued for services
On February 24, 2026, shares of common stock with an aggregate fair value of $75,000 were issued to iHub Inc. d/b/a The Market Link under an investor relations services agreement.
On March 13, 2026, the Company issued shares of common stock to Hudson Global Ventures LLC pursuant to anti-dilution provisions contained in a consulting agreement dated July 8, 2025.
Shares issued for directors’ compensation
On March 26, 2026, the Company granted shares of restricted common stock to directors with an aggregate grant-date fair value of $59,460, or $ per share, as compensation for services.
A summary of equity-classified warrants activity for the three months ended March 31, 2026 is presented below:
The outstanding equity-classified warrants had intrinsic value of approximately $4,025,000 at March 31, 2026.
Options
Pursuant to an employment agreement entered into in January 2026, the Company agreed to grant an employee up to stock options under the Company’s 2019 Stock Incentive Plan, subject to Board approval and vesting conditions. As of the date of this report, the stock option grant had not yet been approved by the Board of Directors and, accordingly, no stock-based compensation expense was recognized related to the arrangement.
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