Note 7 – Stockholders’ Equity

Preferred Series F Convertible Stock

Purchase History

On June 26, 2022, the Company entered into the Series F Agreement with Alpha Capital Anstalt ("Alpha"). Pursuant to the terms of the Series F Agreement, the Board of Directors of the Company (the “Board”) designated a new series of Preferred Stock, the Series F, and authorized the sale and issuance of up to 35,000 shares of Series F with a stated value of $1,000 per share. Pursuant to the Series F Agreement, sales of Series F are accompanied by warrants equal to the number of issuable shares upon conversion of the Series F to Common Stock (the “Series F Warrants”).

Additional Investment Right

The Series F Agreement provides Alpha the right to purchase up to an additional $25,000,000 stated value of Series F, after their initial 10,000 Series F purchased on June 26, 2022, and accompanying warrants (the “Additional Investment Right” or “AIR”). Under the AIR, the Series F and Series F Warrants are initially convertible and exercisable at a conversion and exercise price equal to the volume-weighted average price of the Company’s Common Stock for three trading days prior to the date Alpha gives notice to the Company that it will exercise its AIR. Under the terms of the AIR, conversion and exercise prices are subject to downward adjustment for any equity instrument or equity-linked instrument sold or granted at an effective price per share that is lower than the initial conversion and exercise price (“Down Round Provision”). See Note 8 for warrant related disclosures.

On February 7, 2025, Alpha and the Company executed a funding agreement in which Alpha agreed to exercise its AIR quarterly to provide financing to the Company for the next twelve months, with such amounts and timing of funding to be agreed to by the parties.

As consideration for Alpha’s commitment to provide additional funding, the Company agreed to (i) extend the period in which Alpha can exercise its AIR by extending the termination date of December 31, 2025 to June 1, 2026 and (ii) granting Alpha certain registration rights related to the Series F Alpha currently holds and will receive upon further exercises of its AIR. The Company filed the required registration statement to register 6,500,000 shares of Common Stock which was declared effective by the SEC on April 25, 2025.

During the six months ended June 30, 2026, we issued the following Series F pursuant to the exercise of the AIR by Alpha:

During the six months ended June 30, 2025, we issued the following Series F pursuant to the exercise of the AIR by Alpha:

●  On February 7, 2025, we issued 1,000 Series F to Alpha upon the exercise of their AIR and received $1,000,000 of gross proceeds. The Series F are initially convertible into 450,390 shares of Common Stock at an initial conversion price of $2.2203 and Series F Warrants to purchase up to 450,390 shares of Common Stock at an initial exercise price of $2.2203. The Series F Warrants are immediately exercisable upon issuance for a period of three years. As of June 30, 2026, this issuance of Series F had been fully converted to shares of Common Stock.  

●  On March 17, 2025, we issued 500 Series F to Alpha upon the exercise of their AIR and received $500,000 of gross proceeds. The Series F are initially convertible into 415,420 shares of Common Stock at an initial conversion price of $1.2036 and Series F Warrants to purchase up to 415,420 shares of Common Stock at an initial exercise price of $1.2036. The Series F Warrants are immediately exercisable upon issuance and have a three-year term. This issuance resulted in down round provisions embedded within previously issued Series F and Series F Warrants being triggered (the “March 2025 Down Round Trigger”), including the Series F and Series F Warrants issued on February 7, 2025. See Down Round Triggers and Deemed Dividends resulting from such triggers in Note 7 below. As of June 30, 2026, this issuance of Series F had been fully converted to shares of Common Stock.  

● On  May 5, 2025, we issued 500 Series F to Alpha upon the exercise of their AIR and received $500,000 of gross proceeds. The Series F are initially convertible into 602,846 shares of Common Stock at an initial conversion price of $.8294 and Series F Warrants to purchase up to 602,846 shares of Common Stock at an initial exercise price of $.8294. The Series F Warrants are immediately exercisable upon issuance and have a three-year term. This issuance resulted in down round provisions embedded within previously issued Series F and Series B and F Warrants being triggered (the “ May 2025 Down Round Trigger”). See Down Round Triggers and Deemed Dividends in Note 7 below. 

●  On  June 6, 2025, we issued 500 Series F to Alpha upon the exercise of their AIR and received $500,000 of gross proceeds. The Series F are initially convertible into an aggregate of 418,831 shares of Common Stock at an initial conversion price of $1.1938 and Series F Warrants to purchase up to 418,831 shares of Common Stock at an initial exercise price of $1.1938. The Series F Warrants are immediately exercisable upon issuance and have a three-year term. 

●  On  June 9, 2025, we issued 1,000 Series F to Alpha upon the exercise of their AIR and received $1,000,000 of gross proceeds. The Series F are initially convertible into an aggregate of 838,364 shares of Common Stock at an initial conversion price of $1.1928 and Series F Warrants to purchase up to 838,364 shares of Common Stock at an initial price of $1.1928. The Series F Warrants are immediately exercisable upon issuance and have a three-year term.

●   On  June 17, 2025, we issued 1,000 Series F to Alpha upon the exercise of their AIR and received $1,000,000 of gross proceeds. The Series F are initially convertible into an aggregate of 797,067 shares of Common Stock at an initial conversion price of $1.2546 and Series F Warrants to purchase up to 797,067 shares of Common Stock at an initial price of $1.2546. The Series F Warrants are immediately exercisable upon issuance and have a three-year term.

Since the execution of the Series F Agreement, the Company has sold and issued Series F and Series F Warrants to Alpha or investors that Alpha has assigned the AIR for cash proceeds through the exercise of the AIR. As of June 30, 2026, no Series F shares remain available for issuance. 

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

A summary of the Series F activity for the six months ended June 30, 2025, is as follows:

During the three months ended June 30, 2026 and 2025, the dividends accrued on the Series F were $26,296 and $52,038, respectively. During the six months ended June 30, 2026 and 2025, the dividends accrued on the Series F were $57,292 and $119,688, respectively. As of  June 30, 2026 and  December 31, 2025, accrued dividends on the Series F total $101,190 and $948,532 which are included in accrued expenses on the condensed consolidated balance sheets, at the rate per share (as a percentage of the $1,000 stated par value per share of Series F) of 5% per annum, beginning on the purchase date.   On January 9, 2026, the Company made a cash dividend payment of $853,679, on June 1, 2026 the Company made another cash payment of $50,955.

Series G Convertible Preferred Stock

On  November 5, 2025, the Company executed a certificate of designation (the "Series G Certificate of Designation") of preferences, rights and limitations of the Series G Convertible Preferred Stock, designating 100,000 shares of Series G Convertible Preferred Stock ("Series G"), with a par value of $0.001 and a stated value of $1,000. The shares of Series G have no voting rights except as provided in the Series G Certificate of Designation or as otherwise required by law and only receive dividends when declared by the Board of Directors. Series G have liquidation preferences over common stockholders and are pari passu to Series F.  On  November 5, 2025, the Company entered into a Securities Purchase Agreement with certain existing investors, one of which is Alpha (the "Purchasers"), pursuant to which, subject to the terms and conditions set forth therein, the Company agreed to issue and sell to the Purchasers in a registered direct offering an aggregate of up to 100,000 shares of the Series G. Subject to the terms and conditions of the Series G Certificate of Designation, the Series G were convertible immediately upon issuance, at an initial conversion price equal to $1.2300 per share. The conversion price is subject to customary adjustments for stock dividends, stock splits, reclassifications and the like, and subject to price-based adjustments in the event of any issuances of Common Stock or securities convertible, exercisable or exchangeable for Common Stock, at a price below the then-applicable conversion price (subject to certain exceptions) ("Down Round Provision"). The Company agreed to sell, and the Purchasers, severally and not jointly, agreed to purchase an aggregate of 12,000 shares of Series G on the initial closing date.

On  November 10, 2025, the Company sold 12,000 shares of Series G and received net cash proceeds of $11,507,338.  After issuance of the Series G, the Company sold Series F and Series F Warrants on  November 24, and  December 22, 2025 with conversion and exercise prices of $1.1347 and $$0.9615, respectively. This triggered the Down Round Provision embedded within the Series G and reduced the initial conversion price of $1.2300 to $1.1347 and further to $0.9615 on December 2025.  During the six months ended June 30, 2026, the conversion price was further reduced from $0.9615 to $0.8526 for the 6,190 Series G outstanding upon the January 2026 Down Round Trigger. The impacts of this trigger event are described below.  

On March 4 and 5, 2026, the Company sold 250 and 2,000 shares of Series G, respectively, and received aggregate net proceeds of $2,250,000. The Series G were convertible immediately upon issuance, at an initial conversion price equal to $1.00 per share. 

On May 14 and 28, 2026, the Company sold 2,000 and 3,000 shares of Series G, respectively, and received aggregate net proceeds of $5,000,000. The Series G are convertible immediately upon issuance, at an initial conversion price equal to $1.00 per share. As of June 30, 2026, the Company has issued a total of 19,250 Series G shares, and 80,750 Series G shares remain available for issuance. 

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

(i)  All 2,000 shares of Series G were issued and outstanding on May 27, 2026 when the sale of Series F occurred on May 27, 2026 with a conversion price of $0.9746 which triggerred a down round provision and reduced the Series G conversion price from $1.00 to $0.9746.

Common Stock Issuances

Conversions

During the six months ended June 30, 2026 and 2025, a total of 0 and 700,000 shares of Common Stock were issued for the conversion of $0 and $770,000 of principal outstanding on a convertible note at a conversion ratio of $0 and $1.10, respectively (see Note 5).

During the three months ended June 30, 2026 and 2025, a total of 478 and 5,350 Series F were converted into a total of 559,465 and 6,081,754 shares of Common Stock, respectively, at a conversion price of $0.8526 and $1.10, respectively.  During the six months ended June 30, 2026 and 2025, a total of 11,440 and 0 Series G were converted into a total of 12,562,267 and 0 shares of Common Stock, respectively.  During the six months ended June 30, 2026 , the Series G conversion prices upon conversion were $0.8526 and $1.000.

Warrant Exercises

During the three months ended  June 30, 2026, we issued 608,839 shares of common stock for the cashless exercise of 1,942,118 Series F Warrants with an exercise price of $0.8296.  During the six months ended June 30, 2026, we issued 1,128,050 shares of Common Stock for the exercise of Series F Warrants with an exercise price of $0.8526 and received aggregate cash proceeds of $961,776. Further, during the six months ended  June 30, 2026 we issued 967,645 shares of Common Stock for the cashless exercise of 2,613,915 Series F Warrants with an exercise price of $0.8526.

During the three months ended  June 30, 2025, we issued 1,952,839 shares of Common Stock for the exercise of Series B warrants with an exercise price of $0.8294 and aggregate cash proceeds of $1,619,683. During the six months ended  June 30, 2025, we issued 2,220,688 shares of Common Stock for the exercise of Series B warrants with an average exercise price of $0.9639 or aggregate exercise price of $2,140,516. The Company agreed to credit $350,000 of the aggregate exercise price pursuant to a settlement reached with the Series B warrant holder over a dispute and received and aggregate cash proceeds of $1,790,516.   

Down Round Triggers and Deemed Dividends

       We have several outstanding equity classified and equity-linked instruments that include down round provisions in which the conversion or exercise price is adjusted down upon the Company’s issuance of its Common Stock or common stock equivalents at a price per share that is less than the conversion or exercise price of the equity-linked instruments. As of March 31, 2026, these equity-linked instruments include the Series F, Series F Warrants, Series G and Series B Warrants. 

      Upon a down round provision being triggered in an equity classified instrument, we compute the incremental value provided to the holder for the reduction in conversion or exercise price using a Black-Scholes model to determine the fair value of the equity-linked instruments prior to and after the down round provision trigger. The incremental value is recorded within stockholders’ equity as a deemed dividend.  Specifically, deemed dividends increase additional paid in capital and increase accumulated deficit and increase total net loss or decrease to total net income attributable to common stockholders in computing earnings per share on the condensed consolidated statements of operations and comprehensive income.

       During the periods ended  June 30, 2026 and 2025, we used the following assumptions in the Black-Scholes model used to compute the incremental value for the conversion price reductions in the Series F and Series G and Series F Warrants and Series B Warrants:

Below is a summary of the deemed dividends resulting from the January 2026 and May 2026 Down Round Triggers that reduced the conversion and exercise price of outstanding Series F and Series G, and Series F Warrants, as applicable, during the six months ended June 30, 2026.

On  April 2, 2025, the Company and the majority holder of the Series B warrants executed an Amendment to the Series B Warrant to Purchase Common Stock and Exchange Agreement (the "Series B Amendment"). The Series B Amendment amended the contractual terms of the Series B warrants as disclosed in Note 6.  As consideration for the holder amending the contractual terms of the Series B warrants, we issued to the holder 88,908 shares of Common Stock for no consideration in exchange for 125,362 Series F warrants with a weighted average exercise price of $1.10 (see Note 8). We have included the fair value of these shares issued of $108,468, based on the market price of our stock on the date of the exchange, within stockholders' equity as a deemed dividend. 

Below is a summary of the deemed dividends resulting from the March and May 2025 Down Round Trigger that reduced the conversion and exercise price of outstanding Series F Preferred Stock and Series F Warrants during the six months ended  June 30, 2025.

 Stock-based Compensation

The Company determines the fair value of awards granted under the 2017 Omnibus Equity Incentive Plan (the “Equity Plan”) based on the fair value of its Common Stock on the date of grant. Stock-based compensation expenses related to grants under the Equity Plan are included in general and administrative expenses on the condensed consolidated statements of operations and comprehensive income. 

Restricted Stock Units (“RSUs”)

For the six months ended June 30, 2026, a summary of RSU activity is as follows:

For the six months ended June 30, 2026, the aggregate fair value of RSU awards at the time of grant was $827,642 based on the market price of our Common Stock on the date of grant.

For the three and six months ended June 30, 2026, the Company recognized $138,184 and $212,791 of stock-based compensation expense, respectively and had approximately $541,000 of unrecognized stock-based compensation expense related to RSUs, which will be amortized over approximately thirty three months. 

For the six months ended June 30, 2025, a summary of RSU activity is as follows:

For the six months ended June 30, 2025, the aggregate fair value of RSU awards at the time of vesting was $219,105.

For the three and six months ended  June 30, 2025, the Company recognized $111,832 and $161,710 of stock-based compensation expense and had approximately $93,000 of unrecognized stock-based compensation expense related to RSUs, which will be amortized over approximately twelve months.