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STOCKHOLDERS EQUITY
 12 Months Ended
Dec. 31, 2025
STOCKHOLDERS EQUITY  
STOCKHOLDERS' EQUITY

NOTE 4 – STOCKHOLDERS’ EQUITY

 

Common Stock

 

On December 19, 2024, our stockholders approved an amendment to our Articles of Incorporation to increase the number of authorized shares of common stock from 5,000,000 to 25,000,000.

 

Warrant Exercise Inducement Transactions

 

On March 6, 2025, entered into warrant exercise inducement agreements with holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 837,104 shares of common stock of the Company originally issued in October 2024 at the exercise price of $4.42 per share, in exchange for the issuance of new warrants. The aggregate gross proceeds from the exercise of the existing warrants was $3.7 million, before deducting financial advisory fees. The new warrants were exercisable for an aggregate of up to 1,674,208 shares of common stock, at an exercise price of $3.75 per share, for a period of five years following shareholder approval of the exercise price of the warrants that occurred on May 5, 2025. As the Inducement Warrants were considered offering costs, the Company has recorded both an increase and decrease to additional paid-in capital of approximately $3.9 million representing the difference between the fair market value of the Existing Warrants and Inducement Warrants on the date of the transaction. There was no net impact on total equity as a result.

 

The transaction closed on March 6, 2025, resulting in total net proceeds to the Company of approximately $3.7 million after deducting placement agent fees and other costs of the offering. The net proceeds received by the Company will be used for working capital and general corporate purposes.

 

Roth Capital Partners, LLC (“Roth”) acted as the Company’s financial advisor in connection with the transaction described above. Pursuant to a financial advisory agreement with Roth, the Company (i) paid Roth a financial advisory fee equal to 8% of the aggregate gross proceeds received from the exercise of the Existing Warrants, (ii) reimbursed Roth $40,000 for its legal expenses and (iii) issued Roth a warrant (the “Advisor Warrant”) to purchase 125,566 shares of common stock (being equal to 5.0% of the aggregate number of shares of common stock issuable upon exercise of the Existing Warrants and the Inducement Warrants). The Advisor Warrant has the same terms as the Inducement Warrants.

 

On October 29, 2025, we entered into warrant exercise inducement agreements with holders of existing warrants for the exercise of outstanding warrants to purchase an aggregate of 1,116,136 shares of common stock of the Company originally issued in March 2025, at the exercise price of $3.75 per share, in exchange for the issuance of new warrants. The aggregate gross proceeds from the exercise of the existing warrants was approximately $4.2 million, before deducting financial advisory fees. The new warrants are exercisable for an aggregate of up to 2,790,340 shares of common stock, at an exercise price of $2.86 per share. The new warrants are exercisable for a period of five years following shareholder approval of the exercise of the warrants that occurred on December 26, 2025. In addition, in connection with this transaction, the Company agreed to (i) reduce the exercise price of certain warrants issued in May 2022 and December 2021 to $4.73 per share, and (ii) issue warrants to purchase up to 279,036 shares of common stock in the same form as the issued warrants, to an investor that consented to the transaction. As the Inducement Warrants were considered offering costs, the Company has recorded both an increase and decrease to additional paid-in capital of approximately $9.2 million representing the difference between the fair market value of the Existing Warrants and Inducement Warrants on the date of the transaction. There was no net impact on total equity as a result.

 

The transaction closed on October 29, 2025, resulting in total gross proceeds to the Company of approximately $4.2 million before deducting placement agent fees and other costs of the offering. The net proceeds received by the Company will be used for working capital and general corporate purposes.

 

Roth acted as the Company’s financial advisor in connection with the transaction described above. Pursuant to a financial advisory agreement with Roth, the Company (i) paid Roth a financial advisory fee equal to 8% of the aggregate gross proceeds received from the exercise of the Existing Warrants, and (ii) reimbursed Roth $40,000 for its legal expenses.

 

Registered Direct Offering and Concurrent Private Placement

 

On October 23, 2024 we sold 418,552 shares of common stock at a price of $4.42 per share to certain institutional investors in a registered direct offering priced at-the-market under Nasdaq rules. In a concurrent private placement, we issued the same investors warrants to purchase up to 837,104 shares of common stock at an exercise price of $4.42 per share, which warrants are exercisable until December 19, 2029. Net proceeds from these offerings were approximately $1.6 million. Roth Capital Partners acted as our placement agent in these transactions.

 

Preferred Stock

 

On May 14, 2024, our CEO and Chairman, Timothy Warbington, purchased one share of Series B Preferred Stock for a purchase price of $100 in cash. The Series B Preferred Stock has no voting rights other than the right to 100,000,000 votes solely with respect to a proposal to increase the Company’s authorized shares of common stock (a “Share Increase Proposal”). The Series B Preferred stock will vote together with the Company’s outstanding shares of common stock, as a single class with respect to any Share Increase Proposal, in the same proportion as shares of common stock are voted on such Share Increase proposal. The outstanding share of Series B Preferred Stock was redeemed by the Company for $100, upon the approval by the stockholders to increase the number of authorized common shares, see below. As of December 31, 2025, the $100 is payable to the CEO and is included within accounts payable.

 

On December 20, 2024, following the approval of the Board of Directors, the Company filed a Certificate of Withdrawal of Certificate of Designation with respect to the Company’s Series A Preferred Stock and Series B Preferred Stock. At the time of such filings, the Company did not have any outstanding shares of Series A Preferred Stock or Series B Preferred Stock.

 

Share Repurchase Program

 

On June 12, 2023 the Company announced that its Board of Directors has approved a share repurchase program. The program authorizes the Company to repurchase up to $2 million of its shares of common stock, in the open market or through privately negotiated transactions, in accordance with applicable securities laws and other restrictions. The manner, timing and amount of any purchase will be based on an evaluation of market conditions, the Company’s stock price and other factors. The program has no termination date, may be suspended or discontinued at any time, and does not obligate the Company to acquire any particular number of shares of common stock.

 

A total of 106,250 shares had been repurchased under this program for a total purchase price of $455,916. 101,250 shares were cancelled in December 2024. The remaining 5,000 shares are pending cancellation.

 

Warrants

 

In connection with our October 2024 private offering, we issued warrants to purchase 418,552 shares of common stock and accompanying warrants to purchase 899,886 shares of common stock at a price of $4.42 per share. The warrants were issued in connection with an offering and thus were deemed to be a cost of the offering.

 

Assumptions used in calculating the fair value of the warrants issued in 2024 were as follows:

 

 

 

Range of

Inputs 

Used

 

Annual dividend yield

 

$-

 

Expected life (years)

 

 

5.0

 

Risk-free interest rate

 

 

4.24%

Expected volatility

 

 

176.00%

Common stock price

 

$4.56

 

 

In connection with our March 6, 2025 warrant exercise inducement transaction, we issued warrants to purchase 1,799,774 shares of common stock at a price of $3.75 per share. The warrants were issued in connection with an offering and thus were deemed to be a cost of the offering.

 

Assumptions used in calculating the fair value of the warrants issued on March 6, 2025 were as follows:

 

 

 

Range of

Inputs 

Used

 

Annual dividend yield

 

$-

 

Expected life (years)

 

 

5.0

 

Risk-free interest rate

 

 

4.04%

Expected volatility

 

 

166.00%

Common stock price

 

$3.76

 

 

In connection with our October 29, 2025 warrant exercise inducement transaction, we issued warrants to purchase 3,069,416 shares of common stock at a price of $2.86 per share. The warrants were issued in connection with an offering and thus were deemed to be a cost of the offering.

 

Assumptions used in calculating the fair value of the warrants issued on October 29, 2025 were as follows:

 

 

 

Range of

Inputs 

Used

 

Annual dividend yield

 

$-

 

Expected life (years)

 

 

5.0

 

Risk-free interest rate

 

 

3.70%

Expected volatility

 

 

147.00%

Common stock price

 

$5.59

 

 

As of December 31, 2025, and 2024, warrants to purchase 6,100,719 and 3,184,808 shares of common stock were outstanding respectively.

 

Warrant activity for the years ended December 31, 2025 and 2024 consists of the following:

 

 

 

Warrants

 

 

Weighted

Average

Exercise

Price

 

 

Weighted

Average

Life

Remaining

 

Outstanding, December 31, 2023

 

 

2,284,932

 

 

$26.59

 

 

 

3.22

 

Issued

 

 

899,886

 

 

 

4.42

 

 

 

4.81

 

Exercises

 

 

-

 

 

 

 

 

 

 

 

 

Anti-Dilution Modifications

 

 

-

 

 

 

 

 

 

 

 

 

Forfeiture/Cancellations

 

 

(10 )

 

 

 

 

 

 

 

 

Outstanding, December 31, 2024

 

 

3,184,808

 

 

$20.30

 

 

 

2.95

 

Issued

 

 

4,869,150

 

 

 

3.75

 

 

 

4.65

 

Exercises

 

 

(1,953,240)

 

 

4.12

 

 

 

4.04

 

Anti-Dilution Modifications

 

 

-

 

 

 

 

 

 

 

 

 

Forfeiture/Cancellations

 

 

 

 

 

 

 

 

 

 

 

 

Outstanding, December 31, 2025

 

 

6,100,718

 

 

$5.06

 

 

 

3.41