NOTE 10. STOCKHOLDERS' DEFICIT

Authorized Share Capital

Under the Company’s Amended and Restated Certificate of Incorporation, as amended, the Company is authorized to issue up to 1,500,000,000 shares of common stock and up to 5,000,000 shares of preferred stock with rights and preferences as may be approved by the Company’s Board. As further described in Note 19, “Subsequent Events”, the Company’s Amended and Restated Certificate of Incorporation was further amended to increase the number of authorized shares of common stock from 1,500,000,000 to 5,000,000,000 subsequent to December 31, 2025.

Preferred Stock

There were four series of preferred stock of the Company outstanding during the year ended December 31, 2025 – the Series B Non-Voting Convertible Preferred Stock (“Series B Preferred Stock”), Series D Preferred Stock, Series E Preferred Stock and the Series F Voting Retractable Preferred Stock (“Series F Preferred Stock”). The rights and preferences of each are described below.

Series B Preferred Stock

The Company issued 15,000 shares of Series B Preferred Stock in November 2021 in connection with a private placement transaction. For both years ending December 31, 2025 and December 31, 2024, 131 shares of Series B Preferred Stock remained outstanding. As of December 31, 2025, outstanding shares of Series B Preferred Stock were convertible at the option of the holder into 3,013 shares of common stock at a conversion price of $43.75.

The Series B Preferred Stock does not have any preemptive rights or a preference upon any liquidation, dissolution or winding-up of the Company. Each share of Series B Preferred Stock is convertible into $1,000.00 of common stock at a conversion price per share of $43.75.

Series D Preferred Stock

The Company issued 481,250 shares of Series D Preferred Stock on August 19, 2025 in connection with the 2025 Preferred Stock Purchase Agreement. The Series D Preferred Stock was non‑voting, except for certain protective provisions, and is entitled to dividends and liquidation rights on an as‑converted‑to‑common basis. There were no redemption or repurchase rights that required cash settlement for the Series D Preferred Stock. The Company was not obligated to redeem or repurchase any shares of the Series D Preferred Stock. In October 2025, after the Stockholder Approval, each share of Series D Preferred Stock automatically converted into 32 shares of Common Stock. As of December 31, 2025, no shares of Series D Preferred Stock remained outstanding. See also Note 7, “Financing Activities”.

Series E Preferred Stock

The rights and preferences of the Series E Preferred Stock are identical to those of the Series D Preferred Stock described above except that conversion is at the option of the holder. In October 2025, each share of Series E Preferred Stock was converted into 32 shares of Common Stock. As of December 31, 2025, no shares of Series E Preferred Stock remained outstanding. See also Note 7, “Financing Activities”.

Series F Preferred Stock

The Series F Preferred Stock is not convertible into Common Stock or any other equity instrument and has no dividend rights. The Series F Preferred Stock has voting rights similar to Common Stock with each share of Series F Preferred Stock representing the voting equivalent of approximately 2.12 shares of Common Stock and a liquidation preference equivalent to common stock up to its redemption amount. The Series F Preferred Stock has a total aggregate fixed redemption value of $525 thousand in cash. The redemption terms provide that, after the earlier of (i) Conversion Approval (see Note 7, “Financing Activities”) or (ii) December 31, 2025, holders may redeem the Series F Preferred Stock in exchange for $525 thousand total in cash at any time. The Company may also force redemption of outstanding shares at any time after December 31, 2025. Once redeemed, the shares are cancelled and extinguished; and they revert to authorized but unissued status.

The Series F Preferred Stock is redeemable at the option of the holder. Accordingly, until redemption election is made, the Series F Preferred Stock is classified as mezzanine equity (temporary equity) on the Company’s Consolidated Balance Sheet, between liabilities and stockholders’ equity, at its redemption value. The Company will not accrete the carrying value of the Series F Preferred Stock to its redemption amount since they are equivalent. In October 2025, the Company obtained the Conversion Approval and 639,935 shares of Series F Preferred Stock were redeemed for a $175 thousand cash payment. As of December 31, 2025, 1,346,633 shares of Series F Preferred Stock with a redemption value of $350 thousand remained outstanding. Subsequent to December 31, 2025, in February 2026, an additional 639,935 shares of Series F Preferred Stock were redeemed for a $175 thousand cash payment.

Dividends

On August 26, 2025, the Special Transaction Committee of the Board of Director and the Company’s Board of Directors declared a special cash dividend of $4.00 per share for the Company’s common stock (the “Special Dividend”). The dividend totaling $4.8 million was paid on September 29, 2025 to stockholders of record of Common Stock at the close of business on September 15, 2025.