STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2025

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

NOTE 14 – STOCKHOLDERS’ EQUITY

Issuance of Common Stock

During the years ended December 31, 2025 and 2024, the Company issued 2,394,865 shares and 800,000 shares, respectively, of its common stock in conjunction with the vesting of restricted stock units (“RSUs”) and exercising of stock options. See the “Share-Based Compensation” section below for further details.

Sale of Common Stock

During the year ended December 31, 2025, the Company sold 7,510,109 shares of common stock in “at the market offerings” and received gross proceeds of $37,382,880 based on a weighted average price of $4.98 per share. The aggregate net proceeds received by the Company, after deducting direct issuance costs of $726,256, totaled $36,656,624. In 2024, the Company sold 2,300,000 shares of common stock in “at the market offerings” and received gross proceeds of $2,925,069 based on a weighted average price of $1.27 per share. The aggregate net proceeds received by the Company, after deducting direct issuance costs of $165,388, totaled $2,759,681.

In 2025, the Company completed three separate registered direct offerings of common stock with certain institutional investors. The Company sold 4,000,000 shares in August 2025 at $4.50 per share in the first offering, 3,500,000 shares in October 2025 at $7.50 per share in the second offering, and 2,377,657 shares in October 2025 at $10.50 per share in the third offering. In total, 9,877,657 shares were sold for aggregate gross proceeds of $69,215,399. After deducting direct issuance costs of $1,660,809, net proceeds totaled $67,554,590. There were no registered direct offerings of the Company’s common stock in 2024.

During the year ended December 31, 2025, the Company issued 7,308,322 shares of common stock and received proceeds of $5,732,931 pursuant to the exercise of pre-existing warrants. In 2024, the Company issued 2,204,000 shares of common stock and received proceeds of $1,481,840 related to the exercise of pre-existing warrants. See the “Common Stock Warrants” section below for further details.

Share-Based Compensation

In December 2023, shareholders approved the Company’s 2023 Equity Incentive Plan (“the Plan”), which provided for the grant of incentive stock options, and non-qualified stock options and other types of awards. The general purpose of the Plan is to provide a means whereby eligible employees, officers, directors and other service providers develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to devote their best efforts to our business, thereby advancing our interests and the interests of our shareholders. On July 31, 2025, the Company’s shareholders approved the Amended and Restated 2023 Equity Incentive Plan (the “Amended Plan”) which increased the maximum number of shares of common stock available for issuance under the Amended Plan to 23,700,000 shares.

During the years ended December 31, 2025 and 2024, the Company granted stock options and RSUs totaling 4,653,891 and 7,220,000, respectively. Once vested, each stock option and RSU represents the right to receive one share of the Company’s common stock.

Share-based compensation expense for stock options and RSUs was as follows:

	Years Ended
	December 31,
	2025		2024
Stock options	$	4,249,716	$	219,968
RSUs		2,831,989		348,620
Total share-based compensation expense	$	7,081,705	$	568,588

The following table summarizes the aggregate non-cash stock-based compensation recognized in the Consolidated Statement of Operations for stock options and RSUs:

	Year Ended
	December 31,
	2025		2024
General and administrative	$	633,799	$	363,195
Salaries and benefits		6,432,303		198,891
Professional fees		15,603		6,502
Total non-cash share-based compensation expense	$	7,081,705	$	568,588

Stock options

Stock options granted have either a 3-year or 10-year contractual term and are subject to either service or performance-based vesting conditions. The following table summarizes the weighted-average assumptions used to value options granted during the year ended December 31, 2025 using the Black-Scholes method:

	Year Ended
	December 31,
Weighted-Average Grant Date Assumptions	2025
Expected term (in years)		9.4
Risk-free interest rate		4.4	%
Expected dividend yield		—	%
Expected volatility		97.4	%
Fair value per share	$	2.53

Expected term – The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it uses the contractual term of the option or the simplified method as defined in Staff Accounting Bulletin Topic 14 for the expected term assumption.

Risk-free interest rate – The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of the grant with an equivalent term approximating the expected term of the options.

Expected dividend yield—The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

Expected volatility – The expected volatility is based on the historical volatility of our stock price over the expected term of the stock option.

Activity with respect to stock options is summarized as follows:

		Weighted-		Weighted-
		Average		Average
		Exercise		Remaining	Aggregate
		Price Per		Contractual	Intrinsic
	Shares	Share		Term (in years)	Value
Options outstanding, December 31, 2024	4,330,000	$	0.23	3.7	$	6,652,700
Granted	2,431,582		2.50	—		—
Exercised	(951,667)		0.25	—		—
Forfeited	(174,167)		0.22	—		—
Expired	—		—	—		—
Options outstanding, December 31, 2025	5,635,748	$	1.21	5.5	$	21,526,399
Nonvested options, December 31, 2025	5,249,498	$	1.25	5.6	$	19,808,074
Vested and exercisable options, December 31, 2025	386,250	$	0.57	3.9	$	1,718,325

At December 31, 2025, total unrecognized share-based compensation expense related to stock options was $2,446,124, which is expected to be recognized over a weighted average remaining period of 1.1 years. During the year ended December 31, 2025, 951,667 stock options were exercised to purchase shares of common stock. These exercises included 516,667 options for cash proceeds of $117,667 and cashless exercises where 55,059 shares of common stock were acquired by the Company as treasury stock to pay for the aggregate exercise price of the stock options and 379,941 shares of common stock were issued to the award recipients. See the “Treasury Stock” section below for further details. The total intrinsic value of the 951,667 stock options exercised during the year ended December 31, 2025 was $3,708,327. There were no stock option exercises in 2024.

Restricted stock units

Activity with respect to RSUs is summarized as follows:

		Weighted-
		Average
		Grant Date
		Fair Value
	Shares	Per Share
RSUs outstanding at December 31, 2024	2,090,000	$	0.24
Granted	2,222,309		2.92
Vested	(1,443,198)		1.15
Forfeited	—		—
RSUs outstanding at December 31, 2025	2,869,111	$	1.86

At December 31, 2025, total unrecognized share-based compensation expense related to RSUs was $3,899,790, which is expected to be recognized over a weighted-average remaining period of 2.0 years. The weighted average remaining contractual term of the nonvested RSU shares was 1.3 years at December 31, 2025. During the years ended December 31, 2025 and 2024, 1,443,198 and 791,667 shares of common stock, respectively, were issued upon the vesting of RSUs with a total fair value of $2,938,183 and $174,167, respectively. In related transactions, 94,580 of the newly issued common shares were acquired by the Company as treasury stock to satisfy the mandatory payroll tax withholding obligations resulting from the RSU vesting. See the “Treasury Stock” section below for further details.

Common Stock Warrants

During the year ended December 31, 2025, the Company issued 7,308,322 shares of common stock related to the exercise of pre-existing warrants and received gross proceeds of $5,732,931 based on a weighted average exercise price of $0.78 per share. In 2024, the Company issued 2,204,000 shares of common stock related to the exercise of pre-existing warrants and received gross proceeds of $1,481,840 based on a weighted average exercise price of $0.67 per share. There were no warrants issued or that expired during 2025 and 2024.

Following is a summary of the Company’s warrant activity in 2025 and 2024:

		Weighted
	Number of	Average
	Warrants	Exercise Price
Balance at December 31, 2023	12,346,215	$	0.75
Exercised	(2,204,000)		0.67
Balance at December 31, 2024	10,142,215		0.77
Exercised	(7,308,322)		0.78
Balance at December 31, 2025	2,833,893	$	0.73

Each warrant represents the right to receive one share of the Company’s common stock. The composition of the Company’s warrants outstanding at December 31, 2025 was as follows:

Number of warrants	Exercise Price		Expiration Date	Remaining life (years)
857,143	$	0.46	1/27/2026	0.07
1,270,250	$	0.85	8/3/2026	0.59
706,500	$	0.85	2/1/2026	0.09
2,833,893

All outstanding warrants of the Company expire on or before August 3, 2026.

Preferred Stock

The Company’s Articles of Incorporation authorize 50,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.

Series B

The Company had 750,000 shares of Series B preferred stock issued and outstanding at both December 31, 2025 and 2024. During each of the years ended December 31, 2025 and 2024, the Company recognized $7,500 in Series B preferred stock dividends. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock. At December 31, 2025 and 2024, cumulative dividends in arrears on the outstanding Series B shares were $232,500 and $225,000, respectively.

Series C

The Company had 177,904 shares of Series C preferred stock issued and outstanding at both December 31, 2025 and 2024. In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share, or $97,847 in total.

Treasury Stock

During the year ended December 31, 2025, 55,059 newly issued common shares with a cost of $124,678 were retained by the Company as treasury stock to pay for the aggregate exercise price of stock options exercised and 94,580 of newly issued common shares with a cost of $449,475 were retained by the Company as treasury stock to satisfy the mandatory payroll tax obligations resulting from the vesting of RSUs. There were no common shares retained and transferred to treasury stock during 2024.