| STOCKHOLDERS’ EQUITY |
NOTE 8 – STOCKHOLDERS’ EQUITY
Authorized Capital Stock
Effective
February 28, 2025, the Company amended its articles of incorporation to increase the number of authorized common shares to 15,000,000,000.
The Company has authorized 15,000,000,000 shares
of common stock with a par value of $0.0001 per share and 24,000,000 shares of Preferred Stock with a par value of $0.0001 per
share. The Company shall have the authority to issue the shares of Preferred Stock in one or more series with such rights, preferences
and designations as determined by the Board of Directors of the Company.
Series A Preferred Stock
Effective February 24,
2025, the Company amended the Designation of the Series A Preferred Stock to restore voting rights previously eliminated. Pursuant to
the amendment, Holders of the Series A Preferred Stock shall have the right to vote on any matters brought before the stockholders of
the Company for a vote as a single class. Each share of Series A Preferred Stock shall have the equivalent voting power of 10,000 shares
of Company Common Stock.
The Company has designated 4,000,000 preferred
shares, par value $0.0001, as Series A Preferred Stock.
The Series A Preferred Stockholders are not entitled
to any dividends, or mandatory conversion right or liquidation preference, however, they do have a voluntary conversion right.
Holders of the Company’s Series A Preferred
Stock shall have the right to convert at a ratio of 0.025 share of the Company’s common stock for 1 share of the Company’s
Series A Preferred Stock (subject to adjustments relating to stock splits, distributions, mergers, consolidation, exchange of shares,
recapitalization, reorganization, or other similar event). “Conversion Period” shall mean the period commencing on the earlier
of (i) six months after the SEC declares the Company’s Registration Statement on Form S-1 No. 333-269489 effective and (ii) the
first anniversary of this unanimous written consent and ending on the fifth anniversary of this unanimous written consent. The conversion
right of the Series A Shareholders shall become valid and in force when the SEC declares the Company’s Registration Statement on
Form S-1 No. 333- 269489 effective
As of March 31, 2025, and December 31, 2024, 4,000,000 shares
of Series A Preferred Stock were issued and outstanding.
Series B Preferred Stock
Effective September 27, 2023, the Company has
amended the certificate of designation to authorize 3,000 preferred shares, par value $0.0001, as Series B Preferred Stock.
Series B Preferred Stock has no voting rights but shall be mandatorily converted into common stock with voting rights upon the completion
of our initial public offering or our change of control. The Series B Preferred Stockholders are not entitled to any dividends.
In January 2024, the Company issued an aggregate
of 605 shares of our Series B Preferred Stock to several individuals for $605,000. In February 2024, 1,910 shares
of Series B Preferred Stock were converted into 691,404 shares of common stock upon the closing of the IPO.
As of March 31, 2025, and December 31, 2024, 0
shares of Series B Preferred Stock were issued and outstanding. Series C Convertible Preferred Stock
On August 2, 2024, the Company issued a Certificate
of Designation of Series C Convertible Preferred Stock designating 7,000 shares of its authorized and unissued preferred stock
as Series C Preferred Stock with a stated value of $1,000.00 per share (the “Stated Value”). The Series C Convertible
Preferred Stock sets forth the rights, preferences and limitations of the shares of Series C Preferred Stock.
The following is a summary of the terms of the
Series C Preferred Stock:
| | ● | Dividends. The holders of Series C Preferred Stock will be entitled to receive dividends, based on the Stated Value, at a rate of eight percent (8%) per annum, which dividends shall be paid by the Company out of funds legally available therefor, payable in shares of common stock or, at the option of the Company, cash on the stated value of such Series C Preferred Stock at the applicable dividend rate. Dividends on the Series C Preferred Stock shall commence accruing on the issuance date and shall be computed on the basis of a 360-day year and twelve 30-day months (with 1 year of dividends being guaranteed and deemed earned in full and payable on the first conversion date). From and after the occurrence and during the continuance of any Triggering Event the rate shall automatically be increased to twelve percent (12.0%) per annum. |
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Voting Rights. The Series C COD provides that holders of Series C Preferred Shares shall have the right to vote on all matters presented to the stockholders for approval together with the shares of Common Stock, voting together as a single class, on an “as converted” basis, other than in regards to the Exchange Limitation. |
| | ● | Liquidation. In addition, upon any liquidation, dissolution or winding-up of the Company, prior and in preference to the Common Stock, holders of Series C Preferred Stock shall be entitled to receive out of the assets available for distribution to stockholders before any amount shall be paid to the holders of any of shares of Junior Stock, but pari passu with any Parity Stock then outstanding, an amount per Preferred Share equal to the greater of (A) 120% of the Stated Value of such Preferred Share and (B) the amount per share such Holder would receive if such Holder converted such Preferred Share into Common Stock immediately prior to the date of such payment |
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Conversion. The number of shares of Common Stock issuable upon conversion of any share of Series C Preferred Stock shall be determined by dividing (x) the Conversion Amount of such Preferred Share by (y) the Conversion Price (the “Conversion Rate”): |
| | (i) | “Conversion Amount” means, with respect to each Share, as of the applicable date of determination, the sum of (1) 120% of the Stated Value plus (2) the Additional Amount thereon and any accrued and unpaid late charges with respect to such Stated Value and Additional Amount as of such date of determination. |
| | (ii) | “Conversion Price” means, with respect to each Share, as of any Conversion Date or other date of determination, an initial price of $0.15, subject to further adjustment as provided herein. On each Reset Date, the Conversion Price shall be adjusted to equal the lower of (a) the Conversion Price then in effect (after taking into account and adjusting pursuant to Section 8(b)) and (b) 100% of the applicable Reset Price, determined as of the applicable date of determination; provided that, the Conversion Price shall not be lower than the Floor Price (as defined below). In the event that the number of Conversion Shares (as defined below) subject to a conversion would exceed the Exchange Limitation (as defined below) prior to the Exchange Limitation Date (as defined below), in aggregate with any prior conversions of the Preferred Shares or other issuances of shares of Common Stock that would be subject to the Exchange Limitation, then the Conversion Price shall not be less than the “Minimum Price” as such term is defined in Rule 14.10(i)(4) of the Rules of the BZX Exchange operated by Cboe Global Markets, Inc. (the “Minimum Price”); provided that, the Company shall, promptly following the Second Closing Date, take all corporate action necessary to call a meeting of its stockholders (the “Stockholders’ Meeting”), which shall occur not later than sixty (60) days from the Second Closing Date, for the purpose of seeking approval of the Company’s stockholders with respect to, inter alia, the issuance of all of the Preferred Shares and Conversion Shares, all as may be required by the applicable rules and regulations of the Principal Market (or any successor entity) (the “Stockholder Approval”). In connection therewith, the Company shall as soon as reasonably practicable after the Second Closing Date file with the SEC proxy materials (including a proxy statement and form of proxy) for use at the Stockholders’ Meeting and, after receiving and promptly responding to any comments of the SEC thereon, shall as soon as reasonably practicable mail such proxy materials to the stockholders of the Company. The Company will comply with Section 14(a) of the 1934 Act and the rules promulgated thereunder in relation to any proxy statement (as amended or supplemented, the “Proxy Statement”) and any form of proxy to be sent to the stockholders of the Company in connection with the Stockholders’ Meeting. The Company’s board of directors shall recommend to the Company’s stockholders that the stockholders vote in favor of the proposals for Stockholder Approval at the Stockholders’ Meeting and take all commercially reasonable action (including, without limitation, the hiring of a proxy solicitation firm of nationally recognized standing) to solicit stockholder votes in respect of the Stockholder Approval. If the Company does not obtain Stockholder Approval at the Stockholders’ Meeting, the Company shall call a meeting every ninety (90) days thereafter to seek Stockholder Approval until the date that Stockholder Approval is obtained (the “Exchange Limitation Date”). In the event that the Conversion Price on a Conversion Date would have been less than the applicable Minimum Price or Floor Price if not for the Company obtaining Stockholder Approval, then on any such Conversion Date the Stated Value shall automatically be increased by an amount equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Common Stock trades at on the Trading Day immediately preceding such Conversion Date and (II) the applicable Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Common Stock delivered (or to be delivered) to the Holder on the applicable Conversion Date with respect to such conversion of Preferred Shares from (II) the quotient obtained by dividing (x) the applicable Conversion Amount
that the Holder has elected to be the subject of the applicable conversion of Preferred Shares, by (y) the applicable Conversion Price. Notwithstanding anything to the contrary herein, the Conversion Price shall not be less than the Floor Price, which shall not be subject to any adjustment | | | ● | Redemption. Upon the occurrence of a Triggering Event, each Holder shall (in addition to all other rights it may have hereunder or under applicable law) have the right, exercisable at the sole option of such Holder, to require the Company with respect to each share of Preferred Stock to redeem each share of Preferred Stock then held by such Holder for a redemption price, in cash, equal to 130% of the Stated Value plus the Additional Amount as of the Company Optional Redemption Date (the “Triggering Redemption Amount”). After the occurrence of a Triggering Event, the Dividend Rate on all of the outstanding Preferred Stock held by such Holder shall be increased to 18% per annum thereafter. The Triggering Redemption Amount, in cash or in shares of Common Stock, shall be due and payable or issuable, as the case may be, within five (5) Trading Days of the date on which the notice for the payment therefor is provided by a Holder (the “Triggering Redemption Payment Date”. At any time after the Initial Issuance Date, the Company shall have the right to redeem all or any portion of the Preferred Shares then outstanding (the “Company Optional Redemption Amount”) on the Company Optional Redemption Date (each as defined below) (a “Company Optional Redemption”). The Preferred Shares subject to redemption pursuant to this Section 11(b) shall be redeemed by the Company in cash at a price (the “Company Optional Redemption Price”) equal to 120% of the Stated Value plus the Additional Amount as of the Company Optional Redemption Date. |
As of March 31, 2025, and December 31, 2024, 0 shares
of Series C Convertible Preferred Stock were issued and outstanding.
Series D Redeemable Preferred Stock
On August 2, 2024, the Company issued a Certificate
of Designation of Series D Preferred Stock designating 20,000 shares of its authorized and unissued preferred stock as Series
D Preferred Stock with a stated value of $0.0001 per share (the “Stated Value”). The Series D Preferred Stock sets forth
the rights, preferences and limitations of the shares of Series D Preferred Stock. The defined terms not otherwise defined below are as
defined in the Series D Preferred Stock.
The following is a summary of the terms of the
Series D Preferred Stock:
| ● | Dividends. Under
the terms of the Series D Preferred Stock, the Company shall not pay any dividends on the Series D Preferred Stock. |
| | ● | Voting Rights. Each share of Series D Preferred Stock shall entitle the holder thereof (a) to vote exclusively with respect to the Reverse Stock Split proposal at the Company’s next stockholder meeting following the Original Issue Date (and the Series D Preferred Stock shall not be entitled to vote on any other matter except to the extent required under Title 17 of the Wyoming Statutes or provided herein) and (b) to 10,000 votes per each share of Series D Preferred Stock and shall, except as required by law, vote together with the Common Stock and any other issued and outstanding shares of preferred stock of the Company that are entitled to vote thereon, as a single class. Notwithstanding the foregoing, in addition, as long as any shares of Series D Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series D Preferred Stock, (a) alter or change adversely the powers, preferences or rights given to the Series D Preferred Stock or alter or amend this Certificate of Designation, (b) amend the Articles of Incorporation or other charter documents of the Company in a manner adverse to the Holders, (c) increase the number of authorized shares of Series D Preferred Stock, or (d) enter into any agreement with respect to any of the foregoing. |
| | ● | Liquidation. In addition, upon any liquidation, dissolution or winding-up of the Company, prior and in preference to the Common Stock, the Holders shall be entitled to receive out of the assets available for distribution to stockholders an amount in cash equal to 120% of the aggregate Stated Value of all shares of Series D Preferred Stock held by such Holder |
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Redemption. On the earlier of the date on which (i) the Company obtains Stockholder Approval and (ii) the SPA is terminated prior to the Second Closing, the Company shall immediately redeem, out of funds legally available therefor, each of the Series D Preferred Stock then outstanding at a redemption price equal to the Redemption Price, without the requirement for any notice or demand or other action by any Holder or any other person or entity, provided that a Holder may, in its sole discretion, waive such right to receive payment on the date of Stockholder Approval or such termination, in whole or in part, and any such waiver shall not affect any other rights of such Holder or any other Holder hereunder. Upon receipt of full payment in cash for a complete redemption, each Holder will promptly submit to the Company such Holder’s Series D Preferred Stock certificates, if any, and such redeemed shares shall no longer be deemed to be outstanding. |
As of March 31, 2025, and December 31, 2024, 0 shares
of Series D Redeemable Preferred Stock were issued and outstanding.
Common Stock
Each share of Common Stock entitles the holder
to one vote, in person or proxy, on any matter on which an action of the stockholders of the Company is sought.
During the three months
ended March 31, 2024, the Company had the following common stock transactions:
| ● | 1,400,000 units, consisting of 1 common
share, 1 Series A Warrant and 1 Series B Warrant, at a price of $4.25 per unit for gross proceeds of $5,950,000, from the IPO. After
underwriting fees and discounts the net proceeds to the Company amounted to $5,324,000. |
| ● | 143,262 shares issued for settlement to
related and unrelated parties for accounts payable, valued at $286,808. Amounts settled to related parties were $77,095 (38,404 shares)
to our CEO, $95,165 (47,584 shares) to our Chief Product Officer, and $21,250 (10,625 shares) to a company owned by
our CFO. |
| ● | 1,801,880 shares issued, with a fair value
of $7,657,990, for settlement of convertible notes and accrued interest. |
| ● | 8,920,700 shares issued for the cashless
exercise of 651,929 warrants. |
During the three months
ended March 31, 2025, the Company had the following common stock transactions:
| ● | 148,186,387 shares issued for cashless exercise
of 22,300 Series B warrants. |
| ● | 33,811,286 shares issued for cashless exercise
of 14,000 Series C warrants. |
| ● | 101,855,000 shares issued for partial settlement
of debt (see Note 12). |
As of March 31, 2025, and December 31, 2024, 584,065,699 and 300,213,026 shares
of common stock were issued and outstanding, respectively.
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