v3.26.1
Note 11 - Stockholders' Equity (Deficit)
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Equity [Text Block]

NOTE 11 – STOCKHOLDERS’ EQUITY (DEFICIT)

 

Common and Preferred Stock

 

As of  June 30, 2026 and  December 31, 2025, the Company was authorized to issue 250,000,000 shares of Common Stock and had shares issued and outstanding of 2,475,321 and 1,781,738, respectively. The Company is also authorized to issue 20,000,000 shares of preferred stock, of which 4,243 shares are designated as Series A convertible preferred stock, par value $0.0001. No shares of preferred stock were issued and outstanding as of  June 30, 2026 and  December 31, 2025.

 

In January 2026, the Company issued 3,927 shares of Common Stock withheld by the Company for 12 months after the Elevai Closing to secure the indemnification obligations of the Seller and the Parent under the Asset Purchase Agreement. These shares had a fair value of $67,742. As of  December 31, 2025, the withheld shares are disclosed as consideration payable on the consolidated balance sheet.

 

In March 2026, the Company sold 689,656 shares of Common Stock at a price of $0.29 per share for net proceeds of $190,001 to International Capital Partners LLC, a Florida limited liability company (“ICP”). In connection with this sale, Janakiram Ajjarapu was appointed by the Company’s Board of Directors (the “Board”) as Chairman of the Board and the Company’s Chief Executive Officer as of the closing date. Mr. Ajjarapu is the managing member of, and holds a direct minority membership interest in, ICP and serves as the trustee of a family trust that holds the remaining outstanding membership interests in ICP.

 

2023 Long-Term Incentive Plan

 

In July 2023, the stockholders of the Company approved the 2023 Long-Term Incentive Plan (the “2023 Plan”), which replaced the Amended and Restated 2009 Stock Incentive Plan (the “2009 Plan”). No new awards are being made under the 2009 Plan. Under the 2023 Plan, the Board may grant awards of stock options, stock appreciation rights, restricted stock, restricted stock units, or other stock-based awards to employees and other recipients as determined by the Board. The exercise price per share for an option granted to employees owning stock representing more than 10% of the Company at the time of the grant cannot be less than 110% of the fair market value. Incentive and non-qualified stock options granted to all persons shall be granted at a price no less than 100% of the fair market value, and any price determined by the Board. Options expire no more than ten years after the date of the grant. Incentive stock options to employees owning more than 10% of the Company expire no more than five years after the date of grant. The vesting of stock options is determined by the Board. Generally, the options vest over a four-year period at a rate of 25% one year following the date of grant, with the remaining shares vesting equally on a monthly basis over the subsequent thirty-six months.

 

The initial maximum number of shares of Common Stock that may be issued under the 2023 Plan through incentive stock options was 34,880, which automatically increases on January 1 of each year for a period commencing on January 1, 2024, and ending on and including January 1, 2032, by an amount equal to the lesser of 50,000 shares, 4% of the outstanding shares of Common Stock determined on a fully diluted basis as of the immediately preceding year-end, or such smaller number of shares as determined by the Board or the compensation committee of the Board. In addition, the following shares will be added (or added back) to the shares available for issuance under the 2023 Plan:

 

 

●

Shares subject to 2009 Plan or 2023 Plan awards that expire, terminate, or are canceled or forfeited for any reason;

 

●

Shares that are withheld to satisfy the exercise price of an option issued under the 2009 Plan or 2023 Plan;

 

●

Shares that are withheld to satisfy tax withholding obligations related to any award under the 2009 Plan or 2023 Plan; and

 

●

Shares that are subject to a stock appreciation right that are not delivered on exercise or settlement.

 

Shares of Common Stock issued through the assumption or substitution of awards in connection with a future acquisition of another entity will not reduce the shares available for issuance under the 2023 Plan.

 

Warrants Outstanding

 

A summary of warrant activity during the six months ended June 30, 2026 is as follows:

 

 

 

Number of Shares Issuable on Exercise

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Contractual Life in Years

 

 

Aggregate Intrinsic Value

 

Outstanding, December 31, 2025

 

 

447,673

 

 

$

107.03

 

 

 

3.53

 

 

$

—

 

Issued

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Exercised

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Outstanding, June 30, 2026

 

 

447,673

 

 

$

107.03

 

 

 

3.03

 

 

$

—

 

Exercisable, June 30, 2026

 

 

447,673

 

 

$

107.03

 

 

 

3.03

 

 

$

—

 

 

Options Outstanding

 

A summary of option activity during the six months ended June 30, 2026 is as follows:

 

 

 

Number of Shares Issuable on Exercise

 

 

Weighted Average Exercise Price

 

 

Weighted Average Remaining Life in Years

 

 

Aggregate Intrinsic Value

 

Outstanding, December 31, 2025

 

 

102,879

 

 

$

39.98

 

 

 

8.26

 

 

$

—

 

Granted

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Forfeitures

 

 

(60,668

)

 

 

33.73

 

 

 

—

 

 

 

—

 

Outstanding, June 30, 2026

 

 

42,211

 

 

$

48.95

 

 

 

6.95

 

 

$

—

 

Vested/Exercisable, June 30, 2026

 

 

28,295

 

 

$

57.22

 

 

 

6.43

 

 

$

—

 

 

The Company recorded stock-based compensation expense for options of $78,759 and $194,323 for the three months ended June 30, 2026 and 2025, respectively, and $224,686 and $309,152 for the six months ended June 30, 2026 and 2025, respectively. As of  June 30, 2026, there was approximately $303,092 of total unrecognized compensation expense related to unvested stock options, which will be recognized over the weighted average remaining vesting period of 1.24 years.