Note 7 – Stockholders’ Equity

The Company is authorized to issue 50,000,000 preferred stock shares and 1,000,000,000 common stock shares both with a par value of $0.0001.

Preferred Stock

On October 30, 2020, the Company designated 1,000,000 shares of preferred stock as Series D Convertible Preferred Stock with a par value of $0.0001. At June 30, 2026 and December 31, 2025, there were no shares of preferred stock issued and outstanding.

Common Stock

Issuance of Stock for Services

During the six months ended June 30, 2026, we issued 108,395 fully vested shares of restricted common stock to service providers and our board of directors with a fair value of $311,831, based on the closing market price of our common stock on date of grant.

During the six months ended June 30, 2025, we issued 29,310 fully vested shares of common stock to service providers with a fair value of $105,900 based on the market price of our common stock on date of grant.

Common Stock for Stock Option Exercises

During the six months ended June 30, 2026, we issued an aggregate of 222,972 shares of common stock for stock option exercises, all but one were cashless, and received cash proceeds of $6,600. One of the exercises was by our current Chief Executive Officer (“CEO”) who was issued 60,000 shares of common stock upon the cashless exercise.

During the six months ended June 30, 2025, we issued 20,000 shares of common stock for a stock option exercise that resulted in cash proceeds of $24,000.

Fully Vested Restricted Common Stock

During the six months ended June 30, 2026, certain executives and key employees vested in time-based restricted stock resulting in the Company issuing 243,023 shares of common stock.

During the six months ended June 30, 2025, certain executives and key employees vested in time-based restricted stock resulting in the Company issuing 41,633 shares of common stock.

Stock-based compensation

2021 Plan

The Company has reserved 3,615,000 shares of common stock or common stock equivalents to be issued under our 2021 Equity Incentive Plan (the “2021 Plan”) to the Company’s employees and non-employee services providers. Stock options granted under the 2021 Plan typically have a contractual term of ten years.

Stock-based compensation expense related to the stock options and restricted stock units expected to vest is presented as follows on the condensed consolidated statements of operations:

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

*At June 30, 2026 and December 31, 2025, the options outstanding and exercisable include 0 and 300,000 granted in connection with a merger that occurred in 2021, respectively, which were not granted under the 2021 Plan. The 300,000 options were exercised on a cashless basis during the six months ended June 30, 2026. Further, at June 30, 2026 and December 31, 2025, the options outstanding and exercisable include 27,500 of options granted in 2024 pursuant to a legal settlement and were not granted under the 2021 Plan.

Intrinsic value is based on the difference between the option exercise price and the quoted closing market price at June 30, 2026 or the date of option exercise. At June 30, 2026, intrinsic value was nil.

During the three and six months ended, we granted our employees and our CEO stock options with an exercise price of $2.26 and 2.87, respectively. The options granted to employees vest ratably on each grant-date anniversary over a period of four years. Twenty-five percent (25%) of the CEO’s options vested immediately on date of grant with the remaining seventy-five percent (75%) vesting in eight equal quarterly installments at the end of each calendar quarter beginning June 30, 2026.

Of the total options outstanding at June 30, 2026, 91,894 of the options include performance conditions. The performance-based options vest as follows: 50% vest upon the achievement of operating profit, as defined in the employment agreements, and 50% upon the achievement of a revenue target of $100 million by the end of fiscal year 2028. The performance-based options with the revenue target begin vesting once the Company achieves $15 million in revenue for a fiscal year. Vesting will occur on January 31 of each year through January 31, 2029. The number of options that vest is based on the proportionate percentage of each fiscal year’s revenue to the $100 million target. For example, if our annual revenue for fiscal year 2026 is $20 million, 20% of the stock options with the revenue performance condition will vest on January 31, 2027.

At June 30, 2026, total unrecognized compensation expense for service based and performance-based options was $1,791,325 and $276,721, respectively. The unrecognized service-based expense will be recognized over a weighted-average period of 2.63 years. The unrecognized expense associated with the performance-based options will be expensed when it becomes probable that the performance obligations will be met.

The weighted-average grant date fair value of the options granted during the six months ended June 30, 2026 and June 30, 2025 was $1.93 and $2.44, respectively.

The grant date fair value was estimated using the Black-Scholes option pricing model during the six months ended June 30, 2026 and 2025 and the following assumptions:

Restricted Stock Units (“RSUs”)

At June 30, 2026, our unvested RSUs consist of 371,475 RSUs with time-based vesting provisions granted to executives, non-executives and non-employee directors, and 141,895 RSUs with performance-based vesting provisions. The performance-based unvested RSUs were granted to two current executive officers in prior periods.

A summary of our outstanding unvested time-based RSUs during the three and six months ended June 30, 2026 is as follows:

During the three and six months ended, we granted our CEO 175,000 RSUs with a grant-date fair value of $2.87. Twenty-five percent (25%) of the RSUs vested immediately on date of grant with the remaining seventy-five percent (75%) vesting in eight equal quarterly installments at the end of each calendar quarter beginning on June 30, 2026.

A summary of our outstanding unvested performance-based RSUs during the three and six months ended June 30, 2026 is as follows:

 At June 30, 2026, we have $635,149 of unrecognized stock-based compensation associated with the RSUs with a performance condition which will be recognized when the performance conditions are probable of being met. As of June 30, 2026, the Company had $1,245,018 of unrecognized stock-based compensation associated with the time-based vesting RSUs which will be recognized over a weighted-average vesting period of approximately 2.03 years.

Stock Warrants

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

*Weighted-average exercise price is after the reduction in exercise price for the Modification that occurred during the three months ended June 30, 2026 (see Note 5).