NOTE 6 – STOCKHOLDERS’ EQUITY

Preferred Stock

The Company is authorized to issue 5,000,000 shares of its $0.0001 par value preferred stock. The Company’s board of directors will have the authority to fix and determine the relative rights and preferences of preferred shares, as well as the authority to issue such shares, without further stockholder approval. As of September 30, 2026 and December 31, 2025, no preferred shares have been designated and no preferred shares were issued and outstanding.

Common Stock

Common Stock Issued for Intangible Asset

2025

On February 24, 2025, the Company consummated a Software Purchase Agreement with a third party, whereby the Company purchased software and related technologies for $500,000 in cash and 200,000 shares of the Company’s common stock. The 200,000 shares were valued at $248,000, or $1.24 per share, based on the quoted closing price of the Company’s common stock on the measurement date (see Note 5).

Common Stock Issued for Cash

2026

On January 23, 2026, the Company entered into the At The Market Offering Agreement (“ATM Agreement”) with H. C. Wainwright and Co., LLC (“Wainwright”) under which the Company could offer and sell shares of its common stock having an aggregate sales price of up to $5,600,000 through Wainwright as the sales agent pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-283758), including an accompanying base prospectus dated December 18, 2024 and prospectus supplements dated January 23, 2026 and February 4, 2026. Sales of shares of the Company’s common stock through Wainwright, if any, will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act. Wainwright will use commercially reasonable efforts to sell shares of the Company’s common stock from time to time, based on instructions from the Company (including any price, time or size limits or other parameters or conditions the Company may impose). The Company will pay Wainwright a commission equal to 3.0% of the aggregate gross proceeds from the sales of shares of the Company’s common stock sold through Wainwright under the ATM Agreement and will also reimburse Wainwright for certain specified expenses in connection with the ATM Agreement. On March 20, 2026, the Company increased the maximum aggregate offering price of the shares of the Company’s common stock issuable under the ATM Agreement with Wainwright, dated January 23, 2026, to up to an additional aggregate of $1,065,001, which does not include the approximately $5,600,000 of shares of Common Stock that were sold to date pursuant to the Sales Agreement. During the three months ended March 31, 2026, the Company issued 3,096,481 shares of its common stock for gross proceeds of $5,599,431 and received net proceeds of approximately $5,315,909 pursuant to the ATM Agreement, after deducting $283,522 in fees and expenses. During the three months ended June 30, 2026, the Company issued 524,700 shares of its common stock for gross proceeds of $1,064,931 and received net proceeds of approximately $1,003,564 pursuant to the ATM Agreement, after deducting $61,367 in fees and expenses.

Common Stock issued for Exercise of Warrants, net

2026

On August 14, 2026, the Company entered into an inducement offer letter agreement (the “Inducement Letter”) with certain holders (the “Holders”) of outstanding warrants issued in September 2024 and December 2024 (the “Existing Warrants”). The Existing Warrants had exercise prices ranging from $2.33 to $3.32 per share. Under the Inducement Letter, the Holders agreed to exercise Existing Warrants for cash to purchase an aggregate of 3,007,654 shares of common stock at a reduced exercise price of $1.20 per share. In exchange, the Company agreed to issue new common stock purchase warrants (the “New Warrants”) to purchase up to an aggregate of 6,015,308 shares of common stock at an exercise price of $0.95 per share, with a term of three years from the closing date.

The transaction closed on August 17, 2026, when the Holders exercised the Existing Warrants and the Company issued 3,007,654 shares of common stock. Gross proceeds were approximately $3,609,185, and net proceeds were $3,174,307 after placement agent fees and other offering expenses of $434,878.

The Company engaged H.C. Wainwright & Co., LLC (the “Placement Agent”) as its exclusive placement agent for the transaction. The Company paid the Placement Agent a cash fee of 7.0% and a management fee of 1.0% of the gross proceeds from the exercise of the Existing Warrants, plus $35,000 for non-accountable expenses, $50,000 for accountable expenses, and $15,950 in clearing fees. The Company also issued the Placement Agent, or its designees, warrants to purchase up to 150,383 shares of common stock, representing 5.0% of the shares underlying the exercised Existing Warrants (the “Placement Agent Warrants”). The Placement Agent Warrants have the same terms as the New Warrants, except that their exercise price is $1.50 per share, which is equal to 125% of the reduced exercise price of the Existing Warrants. 

The New Warrants and Placement Agent Warrants were determined to be equity-classified instruments.

On August 14, 2026, the Company amended the Existing Warrants to reduce their exercise price. The amendment was accounted for as a modification of equity-classified warrants under ASC 815-40, as amended by ASU 2021-04. Because the modification was made to induce the Holders to exercise their warrants for cash in connection with an equity issuance, which resulted in the exercise of the Existing Warrants on August 17, 2026, the Company recognized the effect of the modification as an equity issuance cost. 

On August 14, 2026, the Company calculated the total fair value of the consideration for the modification of the Existing Warrants, which includes the incremental fair value of the Existing Warrants (determined by comparing the fair values immediately prior to and immediately after the modification). The fair values were calculated using the Black-Scholes option-pricing model, and the Company determined that the total fair value of the consideration related to the modification of the Existing Warrants amounted to $382,159, which are considered offering costs and were netted against the net proceeds received by the warrant exercise under the guidance of ASU 2021-04. These non-cash offering costs resulted in a charge to additional paid-in capital offset by a credit to additional paid-in capital and accordingly, had no net effect on total stockholders’ equity or net proceeds received.

On August 17, 2026, in connection with the issuance of the New Warrants and the Placement Agent Warrants, the Company calculated the fair value of such warrants using the Black-Scholes option-pricing model, and the Company determined that the aggregate total fair value of the New Warrant to purchase an aggregate of up to 6,015,308 shares of the Company’s common stock and the Placement Agent Warrants to purchase up to 150,383 shares of the Company’s common stock amounted to $4,152,163, which are considered offering costs and were netted against the net proceeds received by the warrant exercise under the guidance of ASU 2021-04. These non-cash offering costs resulted in a charge to additional paid-in capital offset by a credit to additional paid-in capital and accordingly, had no net effect on total stockholders’ equity or net proceeds received.

The fair value of the Existing Warrants on the modification date and the fair value of the New Warrants and Placement Agent Warrants on issuance date were estimated using the Black-Scholes option-pricing model with the following assumptions:

Stock Warrants

Warrant activity for the nine months ended September 30, 2026 is summarized as follows:  

2022 Equity Incentive Plan

On March 30, 2022, the Company’s Board of Directors authorized and adopted the 2022 Equity Incentive Plan (the “2022 Plan”) and reserved an initial 208,333 shares of common stock for issuance thereunder. The 2022 Plan was approved by shareholders on March 30, 2022. The 2022 Plan’s purpose is to encourage ownership in the Company by employees, officers, directors and consultants whose long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the stockholders’ interest and share in the Company’s success. The 2022 Plan provides for the issuance of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based awards. Pursuant to the 2022 Plan, there shall be annual increase in the number shares reserved under the 2022 Plan on the first day of each calendar year beginning with the first January 1 following the effective date of the 2022 Plan and ending with the last January 1 during the initial ten-year term of the 2022 Plan, equal to the lesser of (A) five percent (5%) of the Shares outstanding (on an as-converted basis, which shall include Shares issuable upon the exercise or conversion of all outstanding securities or rights convertible into or exercisable for Shares, including without limitation, preferred stock, warrants and employee options to purchase any Shares) on the final day of the immediately preceding calendar year and (B) such lesser number of Shares as determined by the Board; provided, that, shares of Common Stock issued under the 2022 Plan with respect to an Exempt Award shall not count against such share limit. Accordingly, in June 2024, the number of shares reserved under the 2022 Plan increased by 95,304 to 303,637 reserved shares. On January 13, 2025, based on the 2022 Plan’s annual increase provisions, the number of shares reserved under the 2022 Plan increased by 250,000 to 553,637 reserved shares. On August 12, 2025, the shareholders of the Company approved an amendment to the 2022 Plan to increase the number of shares of common stock reserved for issuance thereunder to 803,637 shares from 553,637 shares. On January 1, 2026, based on the 2022 Plan’s annual increase provisions, the number of shares reserved under the 2022 Plan increased by 250,000 to 1,053,637 reserved shares the Company. As of September 30, 2026, 769,553 shares remain issuable under the 2022 Plan.

Stock Repurchase Plan

On July 29, 2026, the Company’s Board of Directors approved a stock repurchase program authorizing the purchase of up to $1.0 million of the Company’s issued and outstanding common stock, from time to time, with such plan to be in place until December 31, 2026.

Stock Options

On March 20, 2026, the Company granted stock options to purchase an aggregate of 75,000 (25,000 stock options to each director) shares of the Company’s common stock at an exercise price of $1.32 per share to the Company’s board of directors pursuant to the 2022 Equity Incentive Plan. The grant date of the stock options was March 20, 2026 and the options expire on March 20, 2031. The options cliff vest on the one-year anniversary of the stock option grant on March 20, 2027. The stock options were valued on the grant date at an aggregate fair value of $83,307 using a Black-Scholes option pricing model which will be recognized as stock-based compensation expense over the vesting period.

The stock options were valued at the grant date using a Black-Scholes option pricing model with the following assumptions:

The expected terms of the options are based on using the simplified method. The risk-free interest rate is based on the U.S. Treasury rates at the date of grant with maturity dates approximately equal to the expected life at grant date. Volatility is based on historical and expected future volatility of the Company’s common stock. The Company has not historically issued any dividends and does not expect to in the future.

During the nine months ended September 30, 2026 and 2025, the Company recognized total stock-based expenses related to stock options of $137,108 and $96,870, respectively, which have been reflected in general and administrative expenses on the unaudited consolidated statements of operations and comprehensive loss. As of September 30, 2026, a balance of $51,873 remains to be expensed over future vesting periods related to unvested stock options issued for services to be expensed over a weighted average period of 0.36 years.

Stock option activity during the nine months ended September 30, 2026 is summarized as follows: