Note 4. Net Loss per Common Share Available to Common Shareholders

Basic net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the period. Net loss available to common shareholders is net loss less the preferred return accumulated during the period on the Series A Preferred Stock and Series B Preferred Stock, whether or not declared, in accordance with ASC 260-10-45-11. See Note 7 for the terms of the Series A Preferred Stock and Series B Preferred Stock.

Diluted net loss per common share is computed by dividing net loss available to common shareholders by the weighted average number of shares of common stock outstanding during the period, plus the dilutive effect, if any, of potential common shares. Potential common shares consist of shares issuable upon the exercise of outstanding common stock warrants and stock options, determined using the treasury stock method. The Company reported a net loss available to common shareholders for all periods presented. Including potential common shares would therefore have been anti-dilutive, so diluted net loss per common share is the same as basic net loss per common share for all periods presented.

As more fully described in Note 8 of unaudited condensed consolidated financial statements, on December 31, 2025, the Company completed the sale of a security offering that included prefunded warrants to purchase up to 1,609,114 shares of the Company’s common stock for $0.01 per share of which none remained outstanding as of September 30, 2026. In accordance with ASC 260-10-45-13, these pre-funded warrants, sometimes referred to as penny stock warrants due to their low exercise price ($0.0001/share), are considered outstanding shares for purposes of calculating earnings per share for the three months and nine months ended September 30, 2026.

The Series A Preferred Stock and Series B Preferred Stock are not convertible into common stock and therefore do not represent potential common shares.

As more fully described in Note 8 of these unaudited condensed consolidated financial statements, the Company declared a 15% stock dividend that was distributed on August 21, 2025 to stockholders of record as of August 7, 2025. In accordance with ASC 260, basic and diluted earnings per share amounts and weighted-average shares outstanding have been restated for all periods in 2025 presented to reflect the effect of this stock dividend. The Company did not pay any dividends during the first nine months of 2026.

The following table sets forth the computation of basic and diluted net loss per common share:

Schedule of Computation of Basic and Diluted Net Loss per Common Share

The following potentially dilutive securities, presented as of the end of each period, were excluded from the computation of diluted net loss per common share because their effect would have been anti-dilutive:

Schedule of Computation of Diluted Net Loss per Common Share Anti-dilutive Securities