v3.25.1
STOCKHOLDERS’ DEFICIT
 3 Months Ended
Mar. 31, 2025
Equity [Abstract]  
STOCKHOLDERS’ DEFICIT

NOTE 8 – STOCKHOLDERS’ DEFICIT

 

Common Stock

 

As of March 31, 2025 and December 31, 2024, the Company has 300,000,000 authorized shares of common stock par value $0.0001 per share.

 

Preferred Stock

 

As of March 31, 2025 and December 31, 2024, the Company has authorized 30,000,000 shares of preferred stock, 500,000 shares of which were designated as Class A Convertible Preferred Stock (“Class A Preferred Stock”). and 11,000,000 shares of which were designated as Class B Convertible Preferred Stock.

 

Class A Convertible Stock

 

As of March 31, 2025 and December 31, 2024, there were a total of 500,000 shares of Class A Preferred Stock issued and outstanding. The Class A Preferred Stock, when voting as a single class, has the votes of at least 60% of the voting power of the Company. Further, the holder of the Class A Preferred Stock can convert one share of Class A Preferred Stock into two shares of the Company’s common stock, subject to adjustment. In addition, the holder of the Class A Preferred Stock is entitled to a liquidation preference of the Company senior to all other securities of the Company.

 

Class B Convertible Stock

 

On October 23, 2023, pursuant to certain Conversion Agreements, the Company issued an aggregate of 10,349,097 shares of Class B Preferred Stock and extinguished $9,675,000 of convertible debt including accumulated interest as of October 23, 2023 in the amount of $674,097. The holders of the Class B Preferred Stock are entitled to a liquidation preference senior to common stock and junior to the Class A Preferred Stock at a liquidation price of $3.00 per share of Class B Preferred Stock. The Class B Preferred Stock also has conversion rights, whereby each share of Class B Preferred Stock is convertible into two shares of Common Stock at the discretion of the holder, subject to beneficial ownership limitations. The holders of the Class B Preferred Stock have no voting rights, unless otherwise provided for in its Certificate of Designation or by law.

 

On September 9, 2024, pursuant to the conversion agreement, the convertible B shareholders converted 9,286,385 shares of Class B Preferred Stock in exchange for 311,100 common stock. The conversion amount of Class B Preferred Stock was $15,230,601 at the date of conversion.

 

Class C Convertible Stock

 

Effective as of January 2, 2025, the Company filed a Certification of Designation of Class C Convertible Preferred Stock (the “Certificate”) with the Delaware Secretary of State and in accordance with the Delaware General Corporation Law. The Company currently has 30,000,000 shares of preferred stock (“Preferred Stock”) authorized. Of the 30,000,000 authorized shares of Preferred Stock, 500,000 shares are designated as Class A Convertible Preferred Stock (the “Class A Stock”), all of which are issued and outstanding. Additionally, 11,000,000 shares of the Preferred Stock are designated as Class B Convertible Preferred Stock (the “Class B Stock”), of which 531,356 shares are issued and outstanding. The Company has 300,000,000 shares of common stock (“Common Stock”) authorized, of which 7,179,961 shares are issued and outstanding. The Certificate designates 5,000,000 shares of the Company’s Preferred Stock as Class C Convertible Preferred Stock with a par value of $0.0001 per share (“Class C Stock”). The Class C Stock ranks (i) junior to the Class A Stock and Class B Stock, (ii) senior to any other class or series of outstanding Preferred Stock or Common Stock, and (iii) prior to any other class or series of capital stock of the Company hereafter created, and in each case as to distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (the “Class C Stock Distribution Ranking”). The Class C Stock is not entitled to dividends except as required by law. The Class C Stock shall have no voting rights other than as set forth in the Certificate or as required by law.

 

 

During the three months ended March 31, 2025, the Company issued the following Class C Convertible Stock:

 

●Pursuant to the conversion agreement, the notes payable to shareholder including accrued interest in the amount of $2,824,253 was converted to 201,572 shares of Class C Preferred Stock. The conversion amount of Class C Preferred Stock was $20,157,200 at the date of conversion. The Company recognized loss from settlement of debt in the amount of $20,157,200 during the three months ended March 31, 2025.

 

●The Company issued 5,000 shares of Class C Preferred Stock to Limitless Performance, Inc., related to settlement of license related to manufacturing and distributorship. The company recognized stock compensation expense of $500,000 during the three months ended March 31, 2025 which was the fair value based on common stock trading price at the date of conversion.

 

●Pursuant to the conversion agreement, the notes payable to related party including accrued interest in the amount of $1,085,468 was converted to 97,692 shares of Class C Preferred Stock. The conversion amount of Class C Preferred Stock was $9,769,200 at the date of conversion. The Company recognized loss from settlement of debt in the amount of $9,769,200 during the three months ended March 31, 2025.

 

●The Company issued 25,000 shares of Class C Preferred Stock to consultant for services. The Company recognized stock compensation expense of $1,037,500 during the three months ended March 31, 2025 which was the fair value based on common stock trading price at the date of conversion.

 

●Pursuant to the conversion agreement, the vendor accounts payable of $1,583,000 was converted to 15,830 shares of Class C Preferred Stock. The conversion amount of Class C Preferred Stock was $1,583,000 at the date of conversion which was fair value based on common stock trading at the date of conversion. As a result, no gain or loss was recognized.

 

As a result of converting various related party notes payable to preferred C shares, the Company recognized total loss from settlement of debt as summarized below:

  

Three Months Ended

March 31,

 
   2025 
     
Conversion of $2,824,253 notes payable to shareholder  $20,157,200 
Conversion of $1,085,468 notes payable to related party   9,769,200 
      
Total loss from settlement of notes payable to shareholder and related parties  $29,926,400 

 

Class D Convertible Stock

 

Effective as of January 23, 2025, the Company filed a Certificate of Designation of Series D 15% Cumulative Redeemable Perpetual Preferred Stock (the “Certificate”) with the Delaware Secretary of State and in accordance with the Delaware General Corporation Law. The Company currently has 30,000,000 shares of preferred stock (“Preferred Stock”) authorized. Of the 30,000,000 authorized shares of Preferred Stock, 500,000 shares are designated as Class A Convertible Preferred Stock (the “Class A Stock”), all of which are issued and outstanding. 11,000,000 shares of the Preferred Stock are designated as Class B Convertible Preferred Stock (the “Class B Stock”), of which 531,356 shares are issued and outstanding. Additionally, 5,000,000 shares of the Preferred Stock are designated as Class C Convertible Preferred Stock (the “Class C Stock”), of which 320,094 shares are issued and outstanding. The Company has 300,000,000 shares of common stock (“Common Stock”) authorized, of which 12,235,708 shares are issued and outstanding as of January 23, 2025. The Certificate designates 5,000,000 shares of the Company’s Preferred Stock as Series D 15% Cumulative Redeemable Perpetual Preferred Stock, par value of $0.0001 per share (“Series D Stock”). The Series D Stock ranks (i) junior to the Class A Stock, Class B Stock, and Class C Stock and all of the Company’s existing and future indebtedness (including indebtedness convertible into the Company’s Common Stock or Preferred Stock) and to the indebtedness and other liabilities of (as well as any preferred equity interests held by others in) the Company’s existing subsidiaries and any future subsidiaries, (ii) senior to any other class or series of outstanding Preferred Stock or Common Stock, (iii) on parity with all equity securities issued by the Company with terms specifically providing that those equity securities rank on parity with the Series D Stock with respect to rights to the payment of dividends and the distribution of assets upon the Company’s liquidation, dissolution, or winding up, and (iv) senior to any other class or series of capital stock of the Company hereafter created, and in each case as to distributions of assets upon liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (the ranking of the Series D Stock in relation to items (i)-(iv), the “Series D Stock Distribution Ranking”). Holders of the Series D Stock are entitled to receive cumulative cash dividends at the rate of 15% on the stated value of $25.00 per share of the Series D Preferred Stock per annum (equivalent to $3.75 per annum per share) (the “Series D Stock Dividend”). The Series D Stock Dividend is payable every quarter as and if declared by the Company’s board of directors and as permitted by law.

 

During the three months ended March 31, 2025, the Company issued the following Class D Convertible Stock:

 

●Pursuant to the conversion agreement, the notes payable to shareholder including accrued interest in the amount of $3,375,000 was converted to 135,000 shares of Class D Preferred Stock. The conversion amount of Class C Preferred Stock was $3,375,000 or $25 per share at the date of conversion.

 

●On March 21, 2025, the Company entered into a Loan Authorization and Agreement for a loan of $500,000 from a shareholder, the proceeds of which were to be used for working capital purposes. Under this agreement, the Company also provided 10,000 preferred D shares. The Company recorded 10,000 preferred D shares at $250,000 or $25 per share which is deemed at fair value as the previous conversion rate for notes payable to shareholder was at $25 per share.