NOTE 7 – STOCKHOLDERS’ EQUITY

Summary of Outstanding Warrants

The following table summarizes warrant activity during the six months ended June 30, 2026:

A summary of all warrants outstanding and exercisable as of June 30, 2026 is as follows:

CAD Warrants Liability

On August 31, 2023, the Company’s functional currency changed to the USD from the CAD; as such, the Company recorded a derivative liability on the warrants outstanding with CAD exercises prices (the “CAD Warrants”). This derivative liability is being remeasured to fair value at each reporting period and on the settlement date.

As of June 30, 2026 and December 31, 2025, the fair value of the CAD Warrants derivative liability was $306,687 and $326,198, respectively. During the six months ended June 30, 2026 and 2025, the Company recorded a $19,511 gain and a $289,764 loss, respectively, from the change in the fair value of the CAD Warrants.

The following weighted average assumptions were used in the Black-Scholes option-pricing model to measure the fair value of the CAD Warrants:

Debentures Warrants Liability

In September 2024, the Company entered into agreements with various third party lenders for the issuance of convertible debentures (“Debentures”) and warrants to purchase 430,805 shares of the Company’s common stock at an exercise price of $10.55 per share until September 24, 2029 (“Initial Debenture Warrants”). The Debentures were converted into Common Stock in connection with the Company’s November 2024 initial public offering, at which time the Company was also required to issue the “Additional Debenture Warrants” with identical terms as the Initial Debenture Warrants. 

The fundamental transaction clause in the underlying warrant agreements stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Because the volatility input is predetermined and fixed in the warrant agreements as “an expected volatility equal to the greater of 100% and the 30-day volatility from the “HVT” function on Bloomberg”, the Initial and Additional Debenture Warrants are not considered to be indexed to the Company’s stock and, as a result, fail the “fixed-for-fixed” condition (i.e., both the exercise price and the number of shares to be issued are not “fixed” at issuance ). Instead, the Initial and Additional Debenture Warrants are classified as liabilities that are remeasured to fair value each reporting period.

At June 30, 2026 and December 31, 2025, the fair value of the Initial and Additional Debenture Warrants liabilities totaled $2,592,914 and $2,419,456, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized a $173,458 loss and a $1,867,776 loss, respectively, from the change in fair value of the Initial and Additional Debenture Warrants liabilities.

The following weighted average assumptions were used in a binomial lattice model to remeasure the fair value of the Initial and Additional Debenture Warrants:

IPO Agent Warrants

Upon completion of its November 2024 initial public offering, the Company issued warrants exercisable into 642,892 shares of common stock to agents of the IPO (the “IPO Agent Warrants”). The IPO Agent Warrant have an exercise price of $7.18 per share and a term of five years.

The terms of the IPO Agent Warrants include a fundamental transaction clause that stipulates that the expected volatility is determined as the greater of 100% and the 30-day volatility, as calculated from the HVT function on Bloomberg. Because the volatility input is predetermined and fixed in the warrant agreements as “an expected volatility equal to the greater of 100% and the 30-day volatility from the “HVT” function on Bloomberg”, the IPO Agent Warrants are not considered to be indexed to the Company’s stock and, as a result, fail the “fixed-for-fixed” condition (i.e., both the exercise price and the number of shares to be issued are not “fixed” at issuance ). Instead, the IPO Agent Warrants are classified as liabilities that are remeasured to fair value each reporting period.

At June 30, 2026 and December 31, 2025, the estimated fair value of outstanding IPO Agent Warrants was $2,180,929 and $2,044,681, respectively. During the six months ended June 30, 2026 and 2025, the Company recognized a $136,248 loss and a $1,866,669 loss, respectively, from the change in fair value of the IPO Agent Warrants liability.

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the revaluations of the IPO Agent Warrants:

Stock Options

Performance Stock Units

On January 9, 2026, the Company granted performance stock units (“PSUs”) to its Chief Executive Officer. The PSUs represent a right to receive shares of the Company’s common stock upon vesting, subject to the satisfaction of both a service condition and a stock price-based market condition over a two-year “Performance Period” that began on the grant date.

The PSUs vest, if at all, at the end of the Performance Period, contingent upon the participant’s continued service through the last day of the Performance Period and the achievement of specified stock price thresholds of between $12 and $28 per share for at least 20 trading days within any rolling 30 - consecutive-trading-day period during the Performance Period. Ultimately, the number of PSUs earned will range from 38,110 shares if the $12 per share threshold is met to as much as 152,440 shares if the $28 per share threshold is met. If the minimum threshold of $12 per share is not achieved during the Performance Period, no PSUs will vest and the award will be forfeited.

The Company estimated the grant-date fair value of the PSUs to be $550,308 using a Monte Carlo simulation that included the following key assumptions:

The grant date fair value of the PSUs is being recognized as stock-based compensation expense on a straight-line basis over the two-year Performance Period, regardless of when, or if, the market condition is satisfied.

Equity-Classified Awards with Service-Based Vesting

The following table summarizes activity for equity-classified common stock options with service-based vesting conditions:

The following weighted average assumptions were used in the Black-Scholes option-pricing model for the valuation of equity-classified Common Stock options issued during the six months ended June 30, 2026 and the year ended December 31, 2025: 

Restricted Stock Units

During the six months ended June 30, 2026, the Company granted 509,715 restricted stock units (“RSUs”) to employees, non-employees, and directors. The RSUs had a grant-date fair value of $6.56 per unit, for a total grant-date fair value of $3,343,730. RSUs granted to employees and non-employees generally vest over three years, with one-third vesting on each anniversary of the grant date, subject to continued service. RSUs granted to directors vest on the first anniversary of the grant date, subject to continued service. Compensation expense related to RSUs is recognized on an accelerated basis over the requisite service period. Stock-based compensation expense related to RSUs for the three and six months ended June 30, 2026 was $525,891 and $1,004,630, respectively.

Liability-Classified CAD Options

On April 30, 2026, the Company modified all 758,300 outstanding CAD Options to change the exercise prices from CAD to USD, using the Bank of Canada’s published CAD-to-USD exchange rate as of the original grant date for each of the CAD Options. Following this modification, the CAD Options were reclassified to equity as each award now represents a right for the holder to exercise a fixed number of shares at a fixed USD exercise price.

At December 31, 2025, the fair value of the CAD Options liability was $3,174,662. Immediately prior to the modification, the Company performed a final remeasurement and determined the fair value of the CAD Options liability to be $2,843,204. As a result, stock-based compensation for the six months ended June 30, 2026 reflects a decrease of $331,458 related to the change in fair value of these awards through April 30, 2026.

Following the modification, the CAD Options liability was reclassified to equity. In subsequent reporting periods, since the CAD Options are now equity-classified, the Company will no longer remeasure these awards at fair value. Instead, the unrecognized compensation cost of $72,341 related to CAD Options that were unvested on the modification date will be recognized as additional stock-based compensation expense over the remaining requisite service period of each award.

The following weighted average assumptions were used in the Black-Scholes option-pricing model to remeasure the fair value of liability-classified CAD Options during the period from January 1, 2026 to April 30, 2026 and the year ended December 31, 2025:

The following table presents the changes in the CAD Options liability for the six months ended June 30, 2026:

ACI Canada Legacy Performance Options

The following table summarizes ACI Canada legacy performance option activity: