NOTE 7 - CAPITAL STOCK, STOCK OPTIONS, AND INCENTIVES

PREFERRED STOCK

There were 5,000,000 shares of preferred stock, $0.001 par value per share authorized, with no shares issued and outstanding as of June 30, 2025 and December 31, 2024. The Company’s Board of Directors shall determine the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of any series.

COMMON STOCK

Effective February 15, 2022, the number of authorized shares of common stock, $0.001 par value, was increased to 500,000,000 shares.

Effective on July 3, 2024, the Company issued 1,495,390 shares of common stock in exchange for the release of obligations of the Company to repay expenses in the aggregate amount of $593,670 for expenses of the Company previously paid by the related parties. The shares were issued at an implied price of $0.397 per share.

In November 2024, the Company issued an aggregate of 2,631,543 shares of restricted common stock for gross proceeds of $2,500,000, or $0.95 per share, in a private placement. In connection with this offering, the Company incurred $27,394 in offering costs.

There were 9,785,056 and 9,785,056 shares of common stock issued and outstanding as of June 30, 2025 and December 31, 2024, respectively.

WARRANTS

The following is a summary of warrants for the six months ended June 30, 2025: 

Summary of Warrants  

The weighted-average remaining term of the warrants outstanding was 4.14 years as of June 30, 2025.  

On July 3, 2024, the Company issued warrants (the “Warrants”) to purchase Common Stock at an exercise price of $0.3970 per share, (i) to James Askew (“Askew”), an individual, for an aggregate of 2,269,583 shares of Common Stock, and (ii) at an exercise price of $0.3970 per share to Investments AKA, LLC, a limited liability company indirectly controlled by Andre K. Agassi, for an aggregate of 705,417 shares of Common Stock. The Warrants are vested immediately. The Warrants were exercisable as to one half of the shares of Common Stock immediately, and exercisable as to the remaining half of the shares of Common Stock one year following the grant date of the Warrant. The Warrants were issued to the Warrant Holders in consideration of services and support previously performed and provided, and expected to be performed or provided, by the Warrant Holders in furtherance of the Company’s business objectives. The Company entered into a Consulting Agreement, dated July 3, 2024, with Askew with respect to his services and the issuance of his Warrants. The fair value of the warrants was $619,867, which was recognized in stock-based compensation expense during the year ended December 31, 2024.

The Company, for consulting services agreed to be rendered, on March 6, 2025, issued to Darren Cahill, warrants to purchase up to 250,000 shares of the Company’s common stock, at the exercise price of $1.70 per share of common stock. The warrants expire on March 5, 2030. The warrants are exercisable as to one half of the shares of common stock immediately, and exercisable as to the remaining half of the shares of common stock one year following the grant date of the warrants.

The Company, for consulting services agreed to be rendered, on March 6, 2025, issued to Justin Gimblestob, warrants to purchase up to 500,000 shares of the Company’s common stock, at the exercise price of $1.70 per share of common stock. The warrants expire on March 5, 2030. The warrants are exercisable as to one half of the shares of common stock immediately, and exercisable as to the remaining half of the shares of common stock one year following the grant date of the warrants.

The Company, for services agreed to be rendered as the Company’s Chief Financial Officer, on March 6, 2025, issued to Shawn Cable, warrants to purchase up to 100,000 shares of the Company’s common stock, at the exercise price of $1.70 per share of common stock. The warrants expire on March 5, 2030. The warrants are exercisable as to one half of the shares of common stock immediately, and exercisable as to the remaining half of the shares of common stock one year following the grant date of the warrants.  

In connection with the Trademark Purchase Agreement discussed in greater detail under Note 5, the Company granted the Sellers warrants to purchase 50,000 shares of the Company’s common stock. The warrants have an exercise price of $5.75 per share (the closing sales price of the Company’s common stock on the last trading day prior to the entry into the Trademark Acquisition Agreement) and a three year term and are exercisable only on a cash basis. The warrants include a 4.999% beneficial ownership limitation, which can be increased to 9.999% by either holder, with at least 61 days prior written notice to the Company.

The fair value of the warrants was $1,724,064 which was valued using the Black-Scholes pricing model using the range of inputs as indicated below: 

Schedule of Warrants Valuation Assumptions  

The Company capitalized $283,287 in intangible asset pertaining to these warrants on May 31, 2025, based on the vesting conditions noted above. The Company recognized $440,777 in stock-based compensation expense pertaining to these warrants during the six months ended June 30, 2025, based on the vesting conditions noted above.