SHARE CAPITAL |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
| SHARE CAPITAL | NOTE 13 – SHARE CAPITAL
The Company is authorized to issue shares of its $ par value common stock and shares of its $ par value preferred stock. The shares of $ par value preferred stock were comprised of shares authorized and shares issued and outstanding of its Series A convertible preferred stock as of December 31, 2025 and 2024, shares authorized and shares issued and outstanding of its Series B convertible preferred stock as of December 31, 2025 and 2024, shares authorized and shares issued and outstanding of its Series C convertible preferred stock as of December 31, 2025 and 2024, shares authorized and
The share numbers and pricing information in this report have been adjusted to reflect the effects of the following reverse stock splits, which occurred during 2024 and 2025 and through the date the consolidated financial statements were available to be issued:
Silverback Conversions
During the year ended December 31, 2025, the Company issued shares of common stock to Silverback Capital Corporation (“SCC”), representing total accounts payable settlements of $6.2 million, resulting in a loss on settlement of liability of $2.7 million. Additionally, because the Company is obligated to settle obligations to SCC in a variable number of shares, a remeasurement loss of $0.4 million was recognized at December 31, 2025 for the outstanding obligation. At December 31, 2025, approximately $6.3 million was accrued as payable to SCC, which included a $0.4 million adjustment to fair value in contemplation of SCC’s right to potentially settle a portion of its obligations at a variable number of common stock at an approximately 25% discount. The following summarizes the approximate fair value of instruments issued by the Company as of the settlement dates and year-end:
In April 2025, the Company completed a series of stock conversions with SCC pursuant to the terms of existing convertible instruments. During this period, Silverback converted a significant portion of its holdings into shares of the Company’s common stock. In August 2025, the Company and SCC mutually agreed to terminate the settlement agreement, which left outstanding approximately $790,000 in accounts payable. The Company paid $15,000 for SCC’s legal fees in conjunction with the termination.
On October 28, 2025, the Company entered into a Settlement Agreement and Stipulation (the “Second Settlement Agreement”) with SCC to settle outstanding claims owed to SCC. Pursuant to the Settlement Agreement, SCC has agreed to purchase certain outstanding payables between the Company and designated vendors of the Company totaling $6,228,854 (the “Payables”) and will exchange such Payables for a settlement amount payable in shares of common stock of the Company (the “Settlement Shares”). The Settlement Shares shall be priced at 75% of the average of the three lowest traded prices during the five trading day period prior to a share request, which is subject to a floor price of $. The Company agreed to issue SCC shares of Common Stock as a settlement fee.
Debt to Equity Conversions
The conversions occurred over multiple tranches throughout the year, during which the Company’s stock price experienced substantial volatility. The trading price of the Company’s common stock ranged from a low of approximately $ to a high of $ during the period. The Company recognized a significant loss on extinguishment of debt of $14.0 million due to the volatility of the Company’s common stock price.
Shares Issuances
On January 10, 2025, the Company entered into two six-month promissory notes with accredited investors in the principal amounts of $617,100 and $123,420. An original issue discount of $117,100 and $23,420 was applied on the issuance date and was paid through the issuance of and shares of the Company’s Series D Convertible Preferred Stock, resulting in net loan proceeds to the Company of $500,000 and $100,000.
On January 10, 2025, the Company authorized the issuance of share of common stock to a consultant pursuant to the terms of an amendment to a current consulting agreement.
On January 14, 2025, the Company authorized the issuance of shares of Series D Convertible Preferred Stock to seven service providers to the Company and its subsidiaries.
On February 10, 2025, the Company authorized the issuance of share of common stock to an accredited investor upon the conversion of shares of Series D Convertible Preferred Stock.
On February 10, 2025, the Company authorized the issuance of share of common stock, valued at $75,000, to a lender for a fee related to a financing agreement.
On February 27, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a second closing notice for the exchange of $55,000 of assigned note portion for share of the Company’s common stock.
On March 4, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a third closing notice for the exchange of $52,712 of assigned note portion for share of the Company’s common stock.
On March 5, 2025, the Company authorized the issuance of share of common stock to an accredited investor upon the conversion of $64,950 due under a promissory note dated September 4, 2024. On March 5, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a fourth closing notice for the exchange of $55,000 of assigned note portion for share of the Company’s common stock.
On March 10, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a fifth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 12, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a sixth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 12, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a seventh closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 12, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company an eighth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 12, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a nineth closing notice for the exchange of $65,000 of assigned note portion for share of the Company’s common stock.
On March 13, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a tenth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 17, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company an eleventh closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 18, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twelfth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 19, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a thirteenth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company a fourteenth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On March 24, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a fifteenth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company a sixteenth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock.
On March 26, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a seventeenth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company an eighteenth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company a nineteenth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock.
On March 28, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twentieth closing notice for the exchange of $35,000 of assigned note portion for share of the Company’s common stock.
On March 31, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twenty-first closing notice for the exchange of $25,000 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company a twenty-second closing notice for the exchange of $20,000 of assigned note portion for share of the Company’s common stock.
On April 2, 2025, SCC requested the issuance of share of common stock to SCC, representing a payment of approximately $28,050.
On April 2, 2025, SCC requested the issuance of share of common stock to SCC, representing a payment of approximately $28,875.
On April 2, 2025, the Company entered into a second Settlement Agreement and Stipulation (the “Second Settlement Agreement”) with Silverback Capital Corporation (“SCC”) to settle outstanding claims owed to SCC. Pursuant to the Settlement Agreement, SCC has agreed to purchase certain outstanding payables between the Company and designated vendors of the Company totaling $4,690,773 (the “Payables”) and will exchange such Payables for a settlement amount payable in shares of common stock of the Company (the “Settlement Shares”). The Settlement Shares shall be priced at 75% of the average of the three lowest traded prices during the five trading day period prior to a share request, which is subject to a floor price of $. The Company agreed to issue SCC share of Common Stock as a settlement fee.
On April 3, 2025, SCC requested the issuance of share of Common Stock to SCC, representing a payment of approximately $29,700.
On April 4, 2025, SCC requested the issuance of share of Common Stock to SCC, representing a payment of approximately $26,364.
On April 4, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twenty-third closing notice for the exchange of $72,500 of assigned note portion for share of the Company’s common stock. The shares under this request were never issued and on April 9, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a revised twenty-third closing notice for the exchange of $99,000 of assigned note portion for share of the Company’s common stock.
On April 4, 2025, the Company entered into a conversion agreement with a current noteholder, whereby the noteholder agreed to convert all $617,100 of the principal amount owed under its OID Note dated January 10, 2025 into shares of Series D Convertible Preferred Stock.
On April 4, 2025, the Company entered into definitive agreements for the purchase and sale of an aggregate of shares of common stock (or pre-funded warrant in lieu thereof), series A warrants to purchase up to 36,232 shares of common stock and short-term series B warrants to purchase up to 108,696 shares of common stock at a purchase price of $ per share of common stock (or per pre-funded warrant in lieu thereof) and accompanying warrants in a private placement priced at-the-market under Nasdaq rules for a total of $2.5 million. The series A warrants and the short-term series B warrants will have an exercise price of $59 per share and will be exercisable immediately upon issuance. The series A warrants will expire five years from the date of issuance and the short-term series B warrants will expire eighteen months from the date issuance. The private placement closed on April 8, 2025.
On April 7 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twenty-third closing notice for the exchange of $60,000 of assigned note portion for share of the Company’s common stock. The shares under this request were never issued and on April 9, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a revised twenty-fourth closing notice for the exchange of $50,000 of assigned note portion for share of the Company’s common stock.
On April 8, 2025, Coventry Enterprises converted a portion of their debt into share of common stock.
On April 9, 2025, Coventry Enterprises converted a portion of their debt into share of common stock.
On April 9, 2025, Coventry Enterprises converted a portion of their debt into
On April 9, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On April 10, 2025, Coventry Enterprises converted a portion of their debt into share of common stock.
On April 10, 2025, Coventry Enterprises converted a portion of their debt into share of common stock.
On April 10, 2025, Coventry Enterprises converted a portion of their debt into share of common stock.
On April 10, 2025, the Company authorized the issuance of share of common stock to an accredited investor upon the conversion of shares of Series D Convertible Preferred Stock.
On April 10, 2025, the Purchaser, pursuant to the Purchase and Exchange Agreement dated November 11, 2024, as amended on February 19, 2025, sent the Company a twenty-fifth closing notice for the exchange of $66,023 of assigned note portion for share of the Company’s common stock. On the same day, the Purchaser sent the Company a twenty-sixth closing notice for the exchange of $26,192 of assigned note portion for share of the Company’s common stock. This last closing notice repaid all the note balances currently due.
On April 11, 2025, Coventry Enterprises converted a portion of their debt into shares of common stock.
On April 13, 2025, the Company received a conversion notice from a current noteholder, whereby the noteholder converted all $107,500 of the amount owed under its OID Note dated January 10, 2025 into shares of Series D Convertible Preferred Stock.
On April 14, 2025, the Company authorized the issuance of shares of common stock, valued at $ per share, to a financier pursuant to the terms of a settlement and conversion agreement.
On April 14, 2025, the Company authorized the issuance of shares of common stock, valued at $ per share, to a lender pursuant to the terms of a settlement and conversion agreement.
On April 14, 2025, Coventry Enterprises converted a portion of their debt into shares of common stock.
On April 15, 2025, SCC requested the issuance of share of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $105,651.
On April 16, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $406,015.
On April 23, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $277,400.
On April 24, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $584,000.
On April 24, 2025, SCC requested the second issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a second payment of approximately $584,000.
On April 25, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $642,400.
On April 28, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $700,800.
On May 6, 2025, SCC requested the issuance of shares of Common Stock to SCC pursuant to the Second Settlement Agreement, representing a payment of approximately $715,400.
On May 6, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On May 30, 2025, a lender, pursuant to an OID Note dated November 11, 2024, converted $131,910 of the OID Note into shares of the Company’s common stock. Further, on June 3, 2025, the lender converted the remaining $214,487 balance of the OID Note, including interest, into shares of the Company’s common stock.
On June 30, 2025, a lender, pursuant to an OID Note dated December 13, 2024, converted $12,318 of interest owed on the OID Note into share of the Company’s common stock. Further, on July 9, 2025, the lender converted the remaining $150,555 balance of the OID Note, including interest, into shares of the Company’s common stock.
On July 12, 2025, a holder of shares of Series D Preferred Stock converted such shares into share of common stock at a conversion price per share of $1.50.
Effective August 1, 2025, the Company entered into a 5-month strategic advisory agreement, pursuant to which the Company issued the advisor shares of Series D Convertible Preferred Stock valued at $30,000.
On August 1, 2025, the Company authorized the issuance of shares of common stock to Corey Lambrecht, the Company’s President/COO and a director, upon the conversion of shares of Series A Convertible Preferred Stock.
On August 1, 2025, the Company authorized the issuance of shares of common stock to Charles A. Ross, Jr., the Company’s CEO and chairman, upon the conversion of shares of Series A Convertible Preferred Stock.
On August 11, 2025, shares of Series D preferred stock were converted into share of common stock.
On August 13, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On August 14, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On August 15, 2025, the Company entered into an Exchange and Settlement Agreement with Agile Capital Funding, LLC, exchanging all amounts due under a loan agreement for shares of common stock and a three-year pre-funded warrant to purchase 34,984 shares of common stock.
On August 18, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On August 19, 2025, the Company issued shares of common stock and a pre-funded warrant for the purchase of 30 shares of common stock to Schmitty’s.
On August 19, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On August 21, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On August 22, 2025, the Company issued shares of Series E Preferred Stock in exchange for a portion of the purchased Damon Note.
On August 25, 2025, the Company issued share of common stock and a pre-funded warrant for the purchase of 62,693 shares of common stock to the Seller as part of the acquisition of 218 3rd Avenue. This transaction was terminated in September 2025 and the shares of common stock are in process of being returned for cancellation and the pre-funded warrant was cancelled.
On August 26, 2025, the Company entered into a Securities Exchange Agreement with Agile Capital Funding, LLC, exchanging all amounts due under a loan agreement for shares of common stock and a three-year pre-funded warrant to purchase 34,984 shares of common stock.
On September 5, 2025, 1800 Diagonal Lending converted a portion of their debt into share of common stock.
On September 8, 2025, the Company received a subscription agreement for the purchase of shares of Series D Convertible Preferred Stock at $ per share for cash consideration of $300,000.
On September 9, 2025, 1800 Diagonal Lending converted a portion of their debt into shares of common stock.
On September 10, 2025, 1800 Diagonal Lending converted a portion of their debt into shares of common stock.
On September 15, 2025, the Company issued shares of Series D Convertible Preferred Stock for the purchase of 30% of the outstanding membership interests in 218 LLC.
On September 16, 2025, the Company issued shares of Series D Convertible Preferred Stock to Carter, Terry & Company Inc. for partial payment of commissions owed on a recent financing.
On September 25, 2025, the Company authorized the issuance of shares of common stock to Corey Lambrecht, the Company’s President/COO and a director, upon the conversion of shares of Series A Convertible Preferred Stock.
On September 25, 2025, the Company authorized the issuance of shares of common stock to Charles A. Ross, Jr., the Company’s CEO and chairman, upon the conversion of shares of Series A Convertible Preferred Stock.
On September 30, 2025, the Company issued shares of Series D Convertible Preferred Stock to RAEK for the purchase of 3% of the membership interests in RAEK and shares of Series D Convertible Preferred Stock to DeMint Law, PLLC for accrued legal fees.
On October 2, 2025, the Company received subscription agreements for the purchase of shares of Series D Convertible Preferred Stock at $ per share to six accredited investors for cash consideration of $262,500.
On October 3, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock. On October 6, 2025, the same holder converted an additional shares of Series D Convertible Preferred Stock into shares of common stock.
On October 3, 2025, five holders of shares of Series D Convertible Preferred Stock converted such shares into
On October 3, 2025, in connection with the round lot share rounding associated with the reverse stock split, the Company issued share of common stock to twenty stockholders of record affected by the rounding.
On October 6, 2025, two holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 6, 2025, in connection with the round lot share rounding associated with the reverse stock split, the Company issued share of common stock to CEDE & Co. for distribution to stockholders affected by the rounding.
On October 7, 2025, three holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 8, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 8, 2025, Schmitty’s exercised 33,821 pre-funded warrants for the issuance of shares of common stock.
On October 9, 2025, 1800 Diagonal Lending converted a portion of their debt into shares of common stock.
On October 10, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 10, 2025, two holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 13, 2025, 1800 Diagonal Lending converted a portion of their debt into shares of common stock.
On October 13, 2025, two holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 14, 2025, two holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 14, 2025, in connection with the round lot share rounding associated with the reverse stock split, the Company issued shares of common stock to CEDE & Co. for distribution to stockholders affected by the rounding.
On October 15, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 16, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 22, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into
On October 24, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On October 28, 2025, two holders of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On November 4, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On November 6, 2025, SCC requested the issuance of shares of Common Stock to SCC, representing a payment of approximately $180,754.
On November 12, 2025, SCC requested the issuance of shares of Common Stock to SCC, representing a payment of approximately $80,299.
On December 2, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On December 2, 2025, Schmitty’s exercised 33,821 pre-funded warrants for the issuance of shares of common stock.
On December 2, 2025, SCC requested the issuance of shares of common stock to SCC, representing a payment of approximately $124,700.
On December 3, 2025, a holder of shares of Series D Convertible Preferred Stock converted such shares into shares of common stock.
On December 9, 2025, the Company issued shares of Series D Convertible Preferred Stock to a strategic advisor for services to be rendered pursuant to a strategic advisory agreement for the period from December 9, 2025 through September 30, 2027.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock, valued at $1,000,005, to RAEK Data pursuant to the option to exercise additional membership interests in RAEK.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to True Speed Enterprises, valued at $475,005, and shares of Series D Convertible Preferred Stock to Eldora Speedway, Inc., valued at $275,003, pursuant to the Sponsorship Agreement for the period through December 31, 2026.
On December 31, 2025, the Company authorized the issuance of shares of Series D Convertible Preferred Stock to Doug Grau, former president of the Company, for accrued debt (advances) in the amount of $466,581.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to Charles A. Ross, Jr., the Company’s chairman and CEO, for accrued bonuses and other owed amounts totaling $550,792. The Company reserved shares of common stock under the Amended and Restated SIP for issuance to Mr. Ross upon conversion of the shares of Series D Convertible Preferred Stock.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to Corey Lambrecht, the Company’s COO, President and a director, for accrued bonuses, other owed amounts and accrued board member fees totaling $520,352. The Company reserved shares of common stock under the Amended and Restated SIP for issuance to Mr. Lambrecht upon conversion of the shares of Series D Convertible Preferred Stock.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to Michael Dean Smith, an independent director of the Company, for accrued board member fees totaling $179,417. The Company reserved shares of common stock under the Amended and Restated SIP for issuance to Mr. Smith upon conversion of the shares of Series D Convertible Preferred Stock.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to C. Stephen Cochennet, an independent director of the Company, for accrued board member fees totaling $179,417. The Company reserved shares of common stock under the Amended and Restated SIP for issuance to Mr. Cochennet upon conversion of the shares of Series D Convertible Preferred Stock.
On December 31, 2025, the Company issued shares of Series D Convertible Preferred Stock to Larry Sinks, an independent director of the Company, for accrued board member fees of $. The Company reserved shares of common stock under the Amended and Restated SIP for issuance to Mr. Sinks upon conversion of the shares of Series D Convertible Preferred Stock issued for accrued board member fees.
LTIP Shares
On April 9, 2025, the Company registered an aggregate of shares of common stock pursuant to the 2021 Long-Term Incentive Plan and the 2025 Stock Incentive Plan. shares have been issued under the 2025 Stock Incentive Plan through December 31, 2025.
New Preferred Stock Series and Designations and Reg. A+ Offering
On May 10, 2024, the Company’s board of directors approved the designation of a new Series D Convertible Preferred Stock (the “Series D Designation”). The Series D Designation was filed by the Company with the Secretary of State of Nevada on May 10, 2024, and designated shares of Series D Preferred Stock, $ par value per share. The Series D Preferred Stock has the following rights:
Stated Value. Each share of Series D Preferred Stock has an initial stated value of $.
Conversion at Option of Holder. Each share of Series D Preferred Stock shall be convertible into shares of Common Stock at a fixed ratio of 1:5 ( share of Series D Preferred Stock converts into shares of Common Stock), at the option of the holder thereof, at any time following the issuance date of such share of Series D Preferred Stock at the Company’s office or any transfer agent for such stock. The conversion ratio shall not be adjusted for stock splits, stock dividends, recapitalizations or similar events.
Forced Conversion – If the closing price of the Company’s Common Stock during any ten consecutive trading day period has been at or above $ per share (as adjusted for stock splits, stock dividends recapitalizations and similar events), then the Company shall have the right to require the holder of the Series D Preferred Stock to convert all, or any portion of, the shares of Series D Preferred Stock held by such holder for shares of Common Stock. If the Company elects to cause a forced conversion of the shares of Series D Preferred Stock, then it must simultaneously take the same action with respect to all of the other shares of Series D Preferred Stock then outstanding on a pro rata basis.
Voting Rights. The Series D Preferred Stock has no voting rights relative to matters submitted to a vote of the Company’s stockholders (other than as required by law). The Company may not amend its articles of incorporation or the Series D Designation (whether by merger, consolidation, or otherwise) to materially and adversely change the rights, preferences or voting power of the Series D Preferred Stock without the affirmative vote of at least two-thirds of the votes entitled to be cast on such matter by holders of the Company’s outstanding shares of Series D Preferred Stock, voting together as a class.
On August 22, 2025 (as amended on March 29, 2026), the Company’s board of directors approved the designation of a new Series E Preferred Stock (the “Series E Designation”). The Series E Designation was filed by the Company with the Secretary of State of Nevada on August 22, 2025 and designated shares of Series E Preferred Stock, $ par value per share. Each share of Series E Preferred Stock shall have an initial stated value of $1,000.00. The Series E Preferred Stock has the following rights:
Ranking. Except to the extent that the holders of at least a majority of the outstanding Series E Preferred Stock (the “Required Holders”) expressly consent to the creation of Parity Stock (as defined below), all shares of capital stock of the Company shall be junior in rank to all Series E Preferred Stock with respect to the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (such junior stock is referred to herein collectively as “Junior Stock”). The rights of all such shares of capital stock of the Company shall be qualified by the rights, powers, preferences and privileges of the Series E Preferred Stock. Without limiting any other provision of the Certificate of Designations, without the prior express consent of the Required Holders, voting separately as a single class, and with each share of Series E Preferred Stock having one vote on such matter, the Company shall not hereafter authorize or issue any additional or other shares of capital stock that is (i) of senior rank to the Series E Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Senior Preferred Stock”), or (ii) of pari passu rank to the Series E Preferred Stock in respect of the preferences as to dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company (collectively, the “Parity Stock”). In the event of the merger or consolidation of the Company with or into another corporation wherein the Company is the surviving entity, the shares of Series E Preferred Stock shall maintain their relative rights, powers, designations, privileges and preferences provided for herein and no such merger or consolidation shall provide for a result inconsistent therewith, subject to the other terms and conditions herein.
Preferred Return. Each share of Series E Stock shall accrue a rate of return on the Stated Value at the rate of 10% per year, compounded daily to the extent not paid as set forth herein, and to be determined pro rata for any fractional year periods (the “Preferred Return”). The Preferred Return shall accrue on each share of Series E Stock from the date of its issuance, and shall be payable or otherwise settled as set forth herein. Accrued and unpaid Preferred Return shall be cumulative and shall remain payable in cash or additional shares of Series E Stock, in each case at the Corporation’s election. Failure to pay Preferred Return on any quarterly date shall not give any holder the right to require redemption, repurchase or other settlement of the Series E Stock. In the event that the Corporation elects to pay any Preferred Return via the issuance of shares of Series E Stock, no fractional shares of Series E Stock shall be issued, and the Corporation shall round the number of shares of Series E Stock to be issued to the nearest whole share.
Voluntary Liquidation, Dissolution or Winding Up. In the event of any voluntary liquidation, dissolution or winding up of the Corporation, each share of Series E Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its shareholders, before any payment shall be made to the holders of Common Stock or any other class or series of capital stock junior to the Series E Stock with respect to liquidation, an amount per share equal to the Stated Value then in effect plus any accrued but unpaid Preferred Return (the “Series E Preferred Liquidation Amount”). If upon any such voluntary liquidation, dissolution or winding up of the Corporation the assets of the Corporation available for distribution to its shareholders shall be insufficient to pay in full the Series E Preferred Liquidation Amount, the Series E Holders shall share ratably in any distribution of the assets available for distribution in proportion to the respective amounts that would otherwise be payable in respect of the shares held by them if all amounts payable thereon were paid in full. Following payment of the Series E Preferred Liquidation Amount, the Series E Stock shall not participate in any further distributions. For the avoidance of doubt, no merger, consolidation, recapitalization, Fundamental Transaction, sale or disposition of assets, change of control, reverse split, delisting, covenant breach, insolvency event or similar transaction or occurrence shall constitute a liquidation, dissolution or winding up of the Corporation or otherwise entitle any Series E Holder to require the redemption, repurchase or other settlement of any shares of Series E Stock.
No Conversions. The Series E Preferred Stock shall not be convertible into shares of common stock or into any other class or series of stock of the Company.
Company Optional Redemption. Subject to the terms and conditions herein, at any time the Corporation may elect, in the sole discretion of the Board, to redeem all or any portion of the Series E Stock then issued and outstanding from all of the Series E Holders (a “Corporation Optional Redemption”) by paying to the applicable Series E Holders an amount in cash equal to the Series E Preferred Liquidation Amount then applicable to such shares of Series E Stock being redeemed in the Corporation Optional Redemption (the “Redemption Price”). Redemption of the Series E Stock shall at all times remain solely at the election of the Corporation, and no Series E Holder shall have any right to require, accelerate or condition any redemption, repurchase or other settlement of the Series E Stock. The Corporation shall provide written notice of any Corporation Optional Redemption to the applicable Series E Holder(s) within five (5) Business Days following the determination of the Board to consummate the applicable Corporation Optional Redemption, and thereafter such Corporation Optional Redemption shall be completed within five days following the delivery of such notice, and at such time the Corporation shall deliver to the applicable Series E Holder(s) the Redemption Price in valid funds. Each applicable Series E Holder agrees to execute and deliver to the Corporation such instruments and documents, and to take such actions, as reasonably required to consummate the Corporation Optional Redemption. Failure of any Series E Holder to execute any instrument or deliver any certificate shall not delay or prevent a Corporation Optional Redemption.
Dividends and Distributions. The Series E Preferred Stock shall not participate in any dividends, distributions or payments to the holders of the common stock.
Vote/Amendment. Other than as set forth in Section 10(b), the Series E Stock shall not have any voting rights and shall not vote on any matter submitted to the holders of the Common Stock, or any class thereof, for a vote. The Corporation may not, and shall not, amend or repeal this Certificate of Designations without the prior written consent of Series E Holders holding a majority of the Series E Stock then issued and outstanding, in which vote each share of Series E Stock then issued and outstanding shall have one vote, voting separately as a single class, in person or by proxy, either in writing without a meeting or at an annual or a special meeting of such Series E Holders, and any such act or transaction entered into without such vote or consent shall be null and void ab initio, and of no force or effect.
Covenants. Until such time as no shares of Series E Stock remain outstanding, the Corporation will at all times comply with the following covenants:
(a) The Corporation will use its best efforts to timely file on the applicable deadline all reports required to be filed with the SEC pursuant to Sections 13 or 15(d) of the Exchange Act, and will take all reasonable action under its control to ensure that adequate current public information with respect to the Corporation, as required in accordance with Rule 144 of the Securities Act, is publicly available, and will not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would permit such termination.
(b) Reserved.
(c) After six (6) months from the Initial Issuance Date, the Corporation will not have the right to repay any outstanding indebtedness owed to any Series E Holder or its Affiliates.
(d) The Corporation will not increase the authorized shares of Common Stock or Preferred Stock without the prior written consent of the Required Holders, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion.
(e) Reserved.
(f) The Corporation will not make any Restricted Issuance without the Required Holders’ prior written consent, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion.
(g) The Corporation shall not enter into any agreement or otherwise agree to any covenant, condition, or obligation that locks up, restricts in any way or otherwise prohibits the Corporation (a) from entering into a variable rate transaction with any Series E Holder or any Affiliate of any Series E Holder, or (b) from issuing Common Stock, Preferred Stock, warrants, convertible notes, other debt securities, or any other of the Corporation’s securities to any Series E Holder or any Affiliate of any Series E Holder without the Required Holders’ prior written consent, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion.
(h) The Corporation will not pledge or grant a security interest in any of its or its subsidiaries’ assets without the Required Holders’ prior written consent, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion, other than those security interests in effect for the benefit of the Series E Holders.
(i) The Corporation will not dispose of any of its or its subsidiaries’ assets or operations that are material to the Corporation’s or its subsidiaries’ operations without the Required Holders’ prior written consent, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion.
(j) Except in connection with satisfaction of a Nasdaq deficiency notice, the Corporation will not, and will not enter into any agreement or commitment to, undertake or complete any reverse split of the Common Stock or any class of Preferred Stock without the Required Holders’ prior written consent, which consent may be granted on withheld in the Required Holders’ sole and absolute discretion.
(k) The Corporation will not create, authorize, or issue any class of Preferred Stock (including additional issuances of Series E Stock, other than as set forth herein) without the Required Holders’ prior written consent, which consent may be granted or withheld in the Required Holders’ sole and absolute discretion.
(l) The Corporation will not consummate a Fundamental Transaction or enter into an agreement to consummate a Fundamental Transaction without the Required Holders’ prior written consent, which consent may be granted on withheld in the Required Holders’ sole and absolute discretion.
(m) For the avoidance of doubt, no breach of any covenant in this Section 11 shall constitute a redemption event or give any Series E Holder any right to require the Corporation to redeem, repurchase or otherwise settle any shares of Series E Stock in cash or other assets.
Remedies; No Holder Redemption.
(a) If the Corporation breaches any covenant, obligation or agreement in this Certificate of Designations, the Required Holders may deliver written notice specifying the breach and, if such breach is reasonably capable of cure, the Corporation shall have five (5) Business Days to cure.
(b) Upon the occurrence and during the continuance of an uncured breach, the Series E Holders may pursue only such remedies as are available at law or in equity to enforce the specific provision breached, including damages, specific performance and injunctive relief.
(c) Notwithstanding anything herein to the contrary, no breach, Event of Default, covenant default, bankruptcy event, change of control, Fundamental Transaction, delisting, reverse split, financing, asset sale or similar event shall give any Series E Holder any right to require the Corporation to redeem, repurchase, acquire or otherwise settle any share of Series E Stock in cash or other assets.
(d) Without limiting clause (c), no remedy available to the Series E Holders shall include the right to prohibit or condition any issuance of securities on the prior or simultaneous redemption of the Series E Stock.
(e) Redemption of the Series E Stock shall at all times remain solely at the option of the Corporation pursuant to Section 8.
Conversion of Revenue Interest Loan for Preferred Stock Series D and Potential Issuance of Common Stock Equivalents from the Conversion of Series D
On May 13, 2024, the Company and the holder of one of the Revenue Interest Loans entered into a settlement and conversion agreement (“Securities Exchange Agreement”), whereby the Company issued shares of Series D convertible preferred stock as full satisfaction for the revenue participation interest agreement or loan. The Series D convertible preferred stock was purchased at $ per share. Total loan balance and premium payment for inducement for this Revenue Interest Loan on the date of settlement and conversion was $1,000,005. The Series D convertible preferred stock is convertible at the option of the holder into common stock of the Company at a fixed price per share of $1.50 per share.
The Securities Exchange Agreement is intended to be effected as an exchange of securities issued by the Company pursuant to Section 3(a)(9) of the Securities Act. For the purposes of Rule 144, the Company acknowledges that the holding period of the Securities Exchange Agreement (and upon conversion thereof, if any, into shares of the Company’s common stock) may be tacked onto the holding period of the Series D Preferred Stock received by the holder. The Company agrees not to take a position contrary to this unless required by regulatory authorities and their determination to the contrary.
On July 10, 2024, the Company entered into a separately negotiated Conversion Agreement (the “Conversion Agreement”) with the Series D convertible preferred stock holder, pursuant to which the holder agreed to convert the shares of Series D convertible preferred stock it held into shares of common stock, par value $0.001 per share, of the Company. The shares of common stock underlying the Series D convertible preferred stock was reduced and repriced from $ per share to $ per share (which this price represents the closing price for the Company’s common stock on NASDAQ for the day immediately preceding the date of the Conversion Agreement).
Refer to Note 10 for additional information regarding the settlement of debt liabilities through the issuances of Series D Preferred Stock, common stock, pre-funded warrants and convertible notes during the year ended December 31, 2025.
|
|||||||||||||||||||||||||||||||||||||||||||||||||