NOTE 13 – STOCKHOLDERS’ DEFICIT

Preferred Stock

The Company has authorized preferred stock of 10,000,000 shares with a par value of $0.0001.

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, the Company designated 50,000 shares of the Company’s authorized and unissued preferred stock as Series A Convertible Preferred Stock (Series A Preferred).

Each share of Series A Preferred has a stated value of $1,000 per share. The Series A, with respect to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all capital stock of the Company. The holders of Series A Preferred will be entitled to 10% per annum dividends, payable in cash or shares of Class A common stock, provided that if the shares of Class A common stock are utilized to pay the dividends then the dividend rate will be recalculated to 15%. The Series A Preferred have a conversion rate of $6.31 per share and convert into Class A common stock.

As of June 30, 2025 and December 31, 2024, there were 1,885 and 0 shares of Series A Preferred issued and outstanding.

Common Stock

Class A Common Stock

The Class A Common Stock has voting rights of 1 vote per share and votes as a single class together with the Class B Common Stock.

Class B Common Stock

The Class B Common stock has voting rights of 25 votes per share, and votes as a single class together with the Class A Common Stock.

Equity Transactions During the Period

Series A Convertible Preferred Stock

On April 22, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, the Company issued an aggregate of 1,885 shares of Series A Convertible Preferred Stock with a fair value of $2,742 per share. See Note 15 – Fair Value Measurements for more information on the Company’s valuation methodology.

Class A Common Stock

During the three months ended June 30, 2025, the Company issued an aggregate of 31,160 shares of Class A Common Stock with a fair value of $50.00 per share to PIPE Convertible Note holders for conversion of an aggregate principal amount of $1,558,000 in PIPE Convertible Notes (See Note 9 – PIPE Convertible Notes).

During the three months ended June 30, 2025, the Company issued an aggregate of 111,148 shares of Class A Common Stock with fair values ranging from $8.80 - $12.17 per share to PIPE Convertible Note holders in lieu of cash for interest and make whole provisions (See Note 9 – PIPE Convertible Notes).

During the three months ended June 30, 2025, the Company issued an aggregate of 84,662 shares of Class A Common Stock with a fair value of $16.50 per share to dividend note payable holders in lieu of cash dividends (See Note 12 – Dividend notes payable).

Class B Common Stock

During the three months ended June 30, 2025, the Company issued an aggregate of 165,663 shares of Class B Common Stock with a fair value of $33.00 per share to dividend note payable holders in lieu of cash dividends (See Note 12 – Dividend notes payable).

Warrant and Option Valuation

The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term for warrants and options issued to non-employees is the contractual life and the expected term used for options issued to employees and directors is the estimated period of time that options granted are expected to be outstanding. The Company utilizes the “simplified” method to develop an estimate of the expected term of “plain vanilla” employee option grants. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected life of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued.

Warrant Offerings

Series A Preferred Warrants

In applying the Black-Scholes option pricing model to the Series A Preferred Warrants, the Company used the following assumptions:

 SCHEDULE OF FAIR VALUE ASSUMPTIONS OF WARRANTS

During the three months ended June 30, 2025, in connection with the signing of the Exchange Agreements, see Note 9 – PIPE Convertible Notes, PIPE Warrant holders exchanged their outstanding 28,182 Series A Warrants and 31,000 Series B Warrants for Series A Preferred Warrants to purchase 37,033 shares of Series A Preferred Stock. The Series A Preferred Warrants are immediately vested, have an exercise price of $900, and have a grant date fair value of $482,701.

A summary of the Series A Warrant Activity during the six months ended June 30, 2025, is presented below:

 SCHEDULE OF WARRANT ACTIVITY

Series A and Series B Warrant

A summary of the warrant activity during the six months ended June 30, 2025, is presented below:

 SCHEDULE OF WARRANT ACTIVITY