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SHAREHOLDERS EQUITY
 12 Months Ended
Dec. 31, 2025
Shareholders' equity:  
SHAREHOLDERS' EQUITY

NOTE 10. SHAREHOLDERS’ EQUITY

 

Our Board of Directors (the “Board”) may, without further action by our shareholders, from time to time, direct the issuance of any authorized but unissued or unreserved shares of preferred stock in series and at the time of issuance, determine the rights, preferences and limitations of each series. The holders of such preferred stock may be entitled to receive a preference payment in the event of any liquidation, dissolution or winding up by us before any payment is made to the holders of our common stock. Furthermore, the Board could issue preferred stock with voting and other rights that could adversely affect the voting power of the holders of our common stock.

 

Convertible Series A Preferred Stock

 

Our authorized Convertible Series A Preferred Stock, $0.01 par value, consists of 1,000,000 shares. At December 31, 2025 and 2024, there were 63,750 shares issued and outstanding. The Convertible Series A Preferred Stock is convertible at the rate of one share of common stock for one share of Convertible Series A Preferred Stock.

 

Convertible Series B Preferred Stock

 

Our authorized Convertible Series B Preferred Stock, $1,000 stated value, 7.5% cumulative dividend, consists of 4,000 shares. As at December 31, 2025 and 2024, there were no shares issued and outstanding, respectively. Each share of Convertible Series B Preferred Stock may be converted (at the holder’s election) into two hundred shares of our common stock.

 

Common Stock

 

In May 2024, we issued 60,000 shares of Common Stock valued at approximately $45,000 to members of our Board pursuant to our equity plan (see Note 10).

 

In June 2025, we issued 60,000 shares of Common Stock valued at approximately $51,000 to members of our Board pursuant to our equity plan (see Note 10). 

 

In October 2025, we issued 150,000 shares of Common Stock valued at $147,000 in consideration for services provided by an external advisor which has been included in General & Administrative expenses.

 

In December 2025, we issued 52,000 shares of our Common Stock to Hudson Global as consideration for the Commitment Shares, which was valued at $40,650 (see Equity Purchase Agreement below).

 

Equity Purchase Agreement — Hudson Global Ventures, LLC

 

On November 5, 2025, the Company entered into an Equity Purchase Agreement (the "Purchase Agreement") with Hudson Global Ventures, LLC ("Hudson Global"), pursuant to which the Company has the right, but not the obligation, to sell to Hudson Global up to $20,000,000 of shares of Common Stock from time to time over a 24-month period (the "Commitment Period"), subject to the satisfaction of certain conditions set forth in the Purchase Agreement.

 

·

Put Notices and Pricing

 

 

 

At any time during the Commitment Period, the Company may direct Hudson Global to purchase shares of Common Stock by delivering a written Put Notice. Each Put Notice must be for a minimum of $25,000. The purchase price per share for each draw is equal to the lesser of (i) 92% of the average of the three lowest trading prices of the Common Stock during the ten trading days immediately preceding the put date and (ii) 92% of the lowest closing price of the Common Stock during the applicable valuation period as defined in the Purchase Agreement.

 

 

·

Exchange Cap

 

 

 

Under applicable Nasdaq rules, the Company may not issue or sell to Hudson Global shares of Common Stock in excess of 19.99% of the shares of Common Stock outstanding immediately prior to the execution of the Purchase Agreement (the "Exchange Cap") without first obtaining shareholder approval as required by Nasdaq Rule 5635(d). The Company is not obligated to sell any shares to Hudson Global, and Hudson Global is not obligated to purchase any shares that would exceed the Exchange Cap.

 

 

·

Commitment Shares and Registration

 

 

 

In consideration for Hudson Global's commitment under the ELOC, the Company issued 52,000 shares of Common Stock to Hudson Global as Commitment Shares on December 11, 2025, valued at $40,560 based on the closing price of the Common Stock on the date of issuance. These deferred financing costs are included within prepaid expenses on the Consolidated Balance Sheet and will be amortized on a straight-line basis over the 24-month Commitment Period. The Commitment Shares and the shares issuable to Hudson Global under the Purchase Agreement were registered for resale pursuant to the Form S-3 registration statement (File No. 333-291563), which was declared effective on December 8, 2025, and the prospectus supplement filed pursuant to Rule 424(b)(5) on December 11, 2025.

 

Equity Activity During the Year

 

The Company did not draw any funds under the Purchase Agreement during the year ended December 31, 2025. Subsequent to December 31, 2025, the Company made its first draw under the Purchase Agreement, raising gross proceeds of $94,130 through the issuance of 180,000 shares of Common Stock at a price of $0.52 per share. See Note 19, Subsequent Events.

 

Stock-based compensation for the year ended December 31, 2025 was $198,000, consisting of $51,000 for shares issued to directors and $147,000 for shares issued to an external advisor. Stock-based compensation for the year ended December 31, 2024 was $189,307, consisting of $45,000 for shares issued to directors and $144,307 related to officer stock options issued during the year. These expenses were included within General and Administrative expenses in our statement of operations.

 

Stock Options

 

There were no stock options issued during the year ended December 31, 2025.

 

In May 2024, we issued options to purchase 225,000 shares of Common Stock to Officers at an exercise price of $0.75 per share pursuant to their employment agreements. The options were valued at $144,307 and have a contractual term of 10 years. We utilized the Black-Scholes model to fair value the options received by Officers with the following assumptions: volatility, 125%; expected dividend yield, 0%; risk free interest rate, 4.35%; and a contractual term of 10 years. The grant date fair value of each share of Common Stock underlying the options was $0.64.

 

The following table summarizes stock options outstanding as of December 31, 2025 and 2024:

 

 

 

For the years ended December 31,

 

 

 

2025

 

 

2024

 

 

 

Number

of

Options

 

 

Weighted Average Exercise Price

 

 

Number

of

Options

 

 

Weighted

Average

Exercise Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, beginning of period

 

 

805,042

 

 

$1.23

 

 

 

617,542

 

 

$1.38

 

Granted

 

 

-

 

 

 

-

 

 

 

225,000

 

 

 

0.75

 

Exercised

 

 

-

 

 

 

-

 

 

 

(31,250)

 

 

0.88

 

Expired

 

 

(67,500)

 

 

3.83

 

 

 

(6,250)

 

 

0.80

 

Outstanding, end of period

 

 

737,542

 

 

$0.99

 

 

 

805,042

 

 

$1.23

 

 

Options outstanding and exercisable by price range as of December 31, 2025 were as follows:

 

 

 

Average

 

 

 

 

 

 

 

Weighted

Exercisable Options

 

 

 

 

 

 

 

Remaining

 

 

 

 

 

Weighted

 

Outstanding Options

 

 

Contractual

 

 

 

 

 

Average

 

Range

 

 

Number

 

 

Life in Years

 

 

Number

 

 

Exercise Price

 

$

0.71

 

 

 

7,042

 

 

 

2.05

 

 

 

7,042

 

 

$0.71

 

$

0.75

 

 

 

225,000

 

 

 

8.38

 

 

 

225,000

 

 

$0.75

 

$

0.80

 

 

 

2,500

 

 

 

2.07

 

 

 

2,500

 

 

$0.80

 

$

0.85

 

 

 

210,000

 

 

 

7.08

 

 

 

210,000

 

 

$0.85

 

$

1.12

 

 

 

270,000

 

 

 

6.05

 

 

 

270,000

 

 

$1.12

 

$

1.93

 

 

 

10,500

 

 

 

0.95

 

 

 

10,500

 

 

$1.93

 

$

4.40

 

 

 

12,500

 

 

 

0.09

 

 

 

12,500

 

 

$4.40

 

 

 

 

 

 

737,542

 

 

 

6.84

 

 

 

737,542

 

 

$0.99

 

 

Restricted Stock Units

 

During the year ended December 31, 2025, the Company granted 100,000 restricted stock units ("RSUs") to Mr. David Vanston, Chief Financial Officer, under the 2016 Equity Incentive Plan. The RSUs vest in three equal installments: 33,334 shares vested immediately upon the grant date of October 6, 2025; 33,333 shares vest on May 30, 2026; and 33,333 shares vest on May 30, 2027.

 

The following table summarizes RSU activity for the year ended December 31, 2025:

 

 

 

Number of RSUs

 

 

Weighted Average Grant Date Fair Value

 

Outstanding, beginning of period

 

 

-

 

 

 

-

 

Granted

 

 

100,000

 

 

$0.9983

 

Vested

 

 

(33,334)

 

$0.9983

 

Forfeited/Cancelled

 

 

-

 

 

 

-

 

Outstanding, end of period

 

 

66,666

 

 

$0.9983

 

 

As of December 31, 2025, there were 66,666 unvested RSUs outstanding with a weighted average grant date fair value of $0.9983 per share. The remaining unrecognized stock-based compensation expense related to unvested RSUs was approximately $66,553 as of December 31, 2025, which will be recognized over the remaining vesting period through May 30, 2027. 

 

Stock Warrants

 

There were no stock warrants issued during the years ended December 31, 2025 and 2024.

 

The following table summarizes the outstanding common stock warrants as of December 31, 2025 and 2024:

 

 

 

For the years ended December 31,

 

 

 

2025

 

 

 

 

2024

 

 

 

 

 

Number

of

Warrants

 

 

Weighted Average Exercise Price

 

 

Number

of

Warrants

 

 

Weighted

Average

Exercise Price

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, beginning of period

 

 

2,765,846

 

 

$2.26

 

 

 

2,772,096

 

 

$2.25

 

Granted

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Exercised

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Expired

 

 

(161,458)

 

 

1.19

 

 

 

(6,250)

 

 

1.12

 

Outstanding, end of period

 

 

2,604,388

 

 

$2.32

 

 

 

2,765,846

 

 

$2.26

 

 

Warrants outstanding and exercisable by price range as of December 31, 2025 were as follows:

 

Outstanding Warrants

 

 

 

 

Exercisable Warrants

 

Exercise

Price

 

 

Number

 

 

Average Weighted

Remaining Contractual

Life in Years

 

 

Number

 

 

Weighted Average

Exercise Price

 

$

0.64

 

 

 

31,250

 

 

 

7.89

 

 

 

31,250

 

 

$0.64

 

$

0.80

 

 

 

125,000

 

 

 

8.08

 

 

 

125,000

 

 

$0.80

 

$

0.96

 

 

 

437,500

 

 

 

6.98

 

 

 

437,500

 

 

$0.96

 

$

1.68

 

 

 

1,434,721

 

 

 

0.74

 

 

 

1,434,721

 

 

$1.68

 

$

2.18

 

 

 

172,167

 

 

 

0.74

 

 

 

172,167

 

 

$2.18

 

$

4.00

 

 

 

28,750

 

 

 

4.32

 

 

 

28,750

 

 

$4.00

 

$

6.95

 

 

 

375,000

 

 

 

4.75

 

 

 

375,000

 

 

$6.95

 

 

 

 

 

 

2,604,388

 

 

 

2.85

 

 

 

2,604,388

 

 

$2.32

 

 

There were no unvested warrants outstanding as of December 31, 2025.