Note 7 - Share-Based Compensation and Revision of Prior-Period Financial Statements

On October 17, 2024, the Board of Directors approved a share-based compensation arrangement for specified directors and officers. The arrangement established fixed annual dollar amounts of compensation, earned quarterly, with the number of shares for each quarter determined using the average closing price of the Company’s common stock during the final five trading days of that quarter. The shares were to be issued every six months.

While the number of shares for a quarter remained variable, the award represented a fixed monetary obligation payable in a variable number of shares. At the end of each quarter, the formula fixed the number of shares earned for that quarter. Because the obligation was thereafter payable only in a fixed number of the Company’s shares, the Company recorded the amount within additional paid-in capital issuable until settlement.

During the second quarter of 2026, the Company determined that compensation earned under the arrangement had not been recorded in the applicable prior periods. The compensation was allocated as follows:

The Company evaluated the errors under applicable U.S. GAAP and SEC materiality guidance and concluded that the errors were not material to the previously issued financial statements. The Company further concluded that recording the cumulative correction entirely during the second quarter of 2026 would materially distort current-period results. Accordingly, the Company revised the affected prior-period comparative information presented in these unaudited condensed consolidated financial statements.

The compensation for the six months ended June 30, 2025 was allocated equally between the first and second quarters, resulting in $90,559.48 for each quarter.

The revisions increased additional paid-in capital issuable and accumulated deficit as of December 31, 2025 by $444,096.23. The revisions increased selling, general and administrative expense and net loss for the three and six months ended June 30, 2025 by $90,559.48 and $181,118.96, respectively. The revisions increased selling, general and administrative expense and net loss for the three months ended March 31, 2026 by $95,939.25.

On June 1, 2026, the Company issued an aggregate of 115,908 restricted shares of common stock to seven current and former directors and officers in settlement of the entire $540,035.48 balance recorded within additional paid-in capital issuable. The issuance increased common stock and additional paid-in capital, eliminated the APIC-issuable balance, and had no effect on total stockholders’ equity or cash flows. The Company received no cash proceeds from the issuance. The shares were issued as restricted securities without registration under the Securities Act of 1933, as amended, in reliance on Section 4(a)(2) thereof.

Based on management’s determination that no compensation arrangement was in effect for services after March 31, 2026, the Company recognized no additional share-based compensation expense for the three months ended June 30, 2026.

The following tables summarize the effects of the prior-period revisions on the Company’s previously reported financial information:

Effects of Revisions as of December 31, 2025

Effects of Revisions for the Three and Six Months Ended June 30, 2025

Effects of Revisions for the Three Months Ended March 31, 2026