NOTE 6 – STOCKHOLDERS’ DEFICIT

General

The following description of the Company’s capital stock and certain provisions of its amended and restated certificate of incorporation and amended and restated bylaws are summaries and are qualified in their entirety by reference to such documents, copies of which have been previously filed with the Securities and Exchange Commission. The summary below should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

Preferred Stock

Common Stock

Common shares transactions

February 2026 public offering

On February 9, 2026, the Company completed a public offering of 7,142,858 shares of common stock together with Series A-1 warrants to purchase 7,142,858 shares and Series A-2 warrants to purchase 7,142,858 shares of common stock, each at an exercise price of $0.70 per share. In connection with the offering, the Company also issued to the placement agent warrants to purchase an aggregate of 557,058 shares of common stock with a 5five-year term at exercise prices of $0.875 and $3.2375 per share, with an aggregate fair value of $381,374. Gross proceeds from the offering were $5,000,001. The Company received net proceeds of approximately $4,121,272 after deducting placement agent fees, commissions, and other offering-related expenses totaling $878,728.

The Company evaluated the Series A-1, A-2, and placement agent warrants under ASC 815, Derivatives and Hedging, including ASC 815-40 related to contracts in an entity’s own equity, and concluded that such warrants qualify for equity classification. Accordingly, the fair value assigned to the warrants was recorded within stockholders’ equity at issuance and is not subsequently remeasured through earnings. Offering costs and selling concessions associated with the offering were recorded as reductions of additional paid-in capital.

Common stock issued upon exercise of warrants.

During the three months ended March 31, 2026, holders exercised an aggregate of 1,075,844 previously issued Series A-1 and Series A-2 warrants associated with the Company’s February 2026 public offering at an exercise price of $0.70 per share, resulting in the issuance of 1,075,844 shares of common stock and aggregate proceeds of $753,091. Because such warrants were classified within stockholders’ equity, no gain or loss was recognized upon exercise, and the Company recorded the issuance of common stock and the related additional paid-in capital.

Warrant Inducement Offering

March Inducement Agreements

On March 15, 2026, the Company entered into inducement agreements with certain holders of existing warrants originally issued in September 2025 at an exercise price of $3.40 per share (collectively, the “Existing Warrants”), pursuant to which such holders agreed to exercise an aggregate of 1,373,630 Existing Warrants at a reduced exercise price of $1.08 per share, resulting in gross proceeds of $1,483,520. The Company received net proceeds of $1,273,724 after deducting placement agent fees, legal expenses, and other transaction costs of $209,796, which were recorded as reductions of additional paid-in capital.

In connection with the inducement transactions, the Company issued to the exercising holders (i) Series A-3 Common Stock purchase warrants to purchase an aggregate of 1,373,630 shares of Common Stock at an exercise price of $1.08 per share, with a term of five years, and (ii) Series A-4 Common Stock purchase warrants to purchase an aggregate of 1,373,630 shares of Common Stock at an exercise price of $1.08 per share, with a term of eighteen months (collectively, the “New Warrants”). The Company also issued to the placement agent warrants to purchase an aggregate of 96,154 shares of Common Stock at an exercise price of $1.35 per share, with a 5five-year term.

The fair value of the Series A-3 and Series A-4 warrants issued to the exercising holders was $2,439,159, and the fair value of the Existing Warrants immediately before the reduction in exercise price was $926,679, in each case determined using a Black-Scholes option-pricing model as of the March 15, 2026 inducement date. The resulting incremental fair value of $1,512,480, measured in accordance with ASC 815-40-35-16, represents consideration transferred to induce the imminent exercise of the Existing Warrants and the raising of equity capital. The Company recognized that amount as a cost of the offering under ASC 815-40-35-17(a) and charged it against the proceeds of the offering as a reduction of additional paid-in capital. The amount had no effect on net loss, net loss per share or total stockholders’ equity.

The March inducement agreements required the Company to file a resale registration statement covering the shares underlying the Series A-3 and Series A-4 warrants by April 14, 2026, and to cause it to be declared effective within 60 days, or 90 days in the event of full review by the Securities and Exchange Commission. Failure to meet either deadline would obligate the Company to pay partial liquidated damages of 2.0% per month of the aggregate exercise price of those warrants, capped at 8.0%, or a maximum of $237,363, with unpaid amounts bearing interest at 18% per annum. The Company satisfied both requirements and no liability has been recorded under ASC 825-20 as of June 30, 2026.

April Inducement Agreements

On April 26, 2026, the Company entered into a warrant inducement agreement with certain holders of the Series A-1 and Series A-2 warrants issued in its February 2026 public offering (the “Existing Warrants”). The holders exercised an aggregate of 5,715,085 Existing Warrants for cash at their original exercise price of $0.70 per share, which closed on April 28, 2026, and generated gross proceeds of $4,000,560 and net proceeds of $3,569,570 after offering costs of $430,989 recorded as a reduction of additional paid-in capital.

As consideration, the Company issued unregistered Series A-5 warrants for up to 4,742,860 shares and Series A-6 warrants for up to 6,687,310 shares, each exercisable at $0.975 per share and becoming exercisable upon stockholder approval obtained on June 26, 2026 (the “April New Warrants”), together with placement agent warrants for up to 400,056 shares with a fair value of $361,801. The Company evaluated the April New Warrants and placement agent warrants under ASC 815 and concluded they qualify for equity classification; accordingly, their fair value was recorded within stockholders’ equity at issuance and is not subsequently remeasured.

The Existing Warrants were exercised at their stated exercise price of $0.70 per share and no term of the Existing Warrants was modified. The Series A-5 and Series A-6 warrants were issued solely as consideration for the exercises. Their aggregate fair value of $9,261,878, consisting of $4,270,563 for the Series A-5 warrants and $4,991,315 for the Series A-6 warrants, was determined using a Black-Scholes option-pricing model as of the April 26, 2026 inducement date and was recognized as a cost of the offering and charged against the proceeds of the offering as a reduction of additional paid-in capital. The amount had no effect on net loss, net loss per share or total stockholders’ equity.

The inducement agreement required the Company to file a resale registration statement covering the April New Warrant shares by May 26, 2026. The Company did not file until July 10, 2026, triggering partial liquidated damages of 2.0% of the aggregate exercise price per month, capped at 8.0%, or a maximum of $891,553, with unpaid amounts bearing interest at 18% per annum. The Company accounts for this registration payment arrangement under ASC 825-20 and ASC 450-20 and, as of June 30, 2026, recorded a liability of $357,160 in accrued expenses plus accrued interest of approximately $3,847, with the related charge in other expenses and interest in interest expense.

Stockholder Approval

On June 26, 2026, at a special meeting of stockholders, the Company’s stockholders approved each of the Warrant Inducement Agreements dated March 15, 2026, and April 26, 2026. As of the record date of May 13, 2026, 38,568,263 shares of common stock were outstanding and entitled to vote, and holders of 14,300,930 shares (approximately 37.08%) were represented in person or by proxy. As a result of the approval, the condition to exercisability contained in the Series A-3, A-4, A-5, and A-6 Warrants was satisfied and those warrants became exercisable in accordance with their respective terms.

Exercises of Series A-1, A-2, A-4, A-5 and A-6 Warrants

During June 2026, holders exercised an aggregate of 11,613,431 warrants, resulting in the issuance of 9,329,356 shares of common stock. Of these, 548,201 shares were issued upon cash exercises of Series A-1, A-2, and A-4 warrants for aggregate proceeds of approximately $497,637, and 8,781,155 shares were issued upon cashless (net-share) exercises of 11,065,230 Series A-1, A-2, A-5, and A-6 warrants, for which no cash proceeds were received. The exercises comprised exercises by a holder of Series A-4 Warrants on June 3 and June 8, 2026, and by a holder of Series A-5 and A-6 Warrants on June 3 and June 8, 2026. Included in the Series A-6 exercises were 1,687,308 warrants stated to have been reassigned to the exercising holder from two other holders; the Company is confirming the documentation of that reassignment. The aggregate shares issued represented approximately 24.2% of the Company’s common stock outstanding as of May 14, 2026.

By their terms and the related warrant inducement agreements, the Series A-4, A-5 and A-6 Warrants were not exercisable prior to the date the Company obtained stockholder approval. Stockholder approval was obtained on June 26, 2026 (see “Stockholder Approval” below); accordingly, the exercises described above occurred prior to the date the warrants became exercisable. In addition, the shares issued upon the cashless exercises of the Series A-5 and A-6 Warrants were not covered by an effective registration statement and did not qualify for resale under Rule 144, and the shares issued upon exercise of the Series A-4 Warrants were issued at a time when the related resale prospectus was unavailable as a result of the delayed filing of the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2026. Such shares were issued without restrictive legends.

The Company, with the assistance of counsel, is evaluating the validity of these issuances, the effect of the June 26, 2026, stockholder approval on exercises that occurred prior to that date, and whether any of the shares are subject to recall, rescission, or repurchase and cancellation. The Company, with the assistance of its counsel, is evaluating the accounting and legal consequences of these issuances, including whether any rescission, recall, repurchase, or cancellation rights affect the classification of the issued shares. Based on the information currently available, the Company has preliminarily concluded that permanent-equity classification is appropriate; however, this conclusion remains subject to completion of the Company’s evaluation and review by its counsel.

Shares issued for services

On February 24, 2026, 88,235 shares of common stock with an aggregate fair value of $75,000 were issued to iHub Inc. d/b/a The Market Link under an investor relations services agreement.

On March 13, 2026, the Company issued 11,413 shares of common stock to Hudson Global Ventures LLC pursuant to anti-dilution provisions contained in a consulting agreement dated July 8, 2025.

Shares issued for directors’ compensation

On March 26, 2026, the Company granted 60,000 shares of restricted common stock to directors with an aggregate grant-date fair value of $59,460, or $0.99 per share, as compensation for services.

A summary of equity-classified warrants activity for the six months ended June 30, 2026, is presented below:

 SCHEDULE OF WARRANTS ACTIVITY

The outstanding equity-classified warrants had intrinsic value of approximately $7,458,600 at June 30, 2026.