NOTE 11 - EQUITY

During February 2025, we completed our initial public offering (“IPO”) of 1,280,000 shares of common stock at a price of $4.00 per share, generating gross proceeds of $5,120,000. Additionally, the underwriters partially exercised their over-allotment option (the “green shoe”), purchasing approximately 164,000 shares at $4.00, resulting in additional gross proceeds of approximately $656,000. In total, the offering generated gross proceeds of approximately $5,776,000. After deducting underwriting discounts and commissions of approximately $1,000,000, we received net proceeds of approximately $4,500,000. In connection with the offering, we issued to the underwriters warrants to purchase up to 72,179 shares of our common stock at an exercise price of $4.80 per share for a total value of $144,358. These warrants have a term of five years from the effective date of the registration statement. We also incurred $188,832 of offering costs.

In connection with previously granted RSUs under the 2025 Equity Incentive Plan, on December 31, 2025, holders of total of 75,000 RSUs have fully vested, resulting in the issuance of 75,000 shares of common stock. The RSUs had been originally granted in February 2025 and were subject to vesting conditions. The shares issued upon vesting as restricted securities.

As of December 31, 2025, the Company had the following equity awards outstanding: RSUs: 75,000 vested RSUs for the year ended December 31, 2025 in total out of the total 75,000. Performance based RSUs: 225,000 and market based RSUs: 250,000. Stock Options: 1,187,500 options outstanding under the Option 2035/02/05 plans. Underwriter Warrants: 72,179 warrants issued in February 2025 with a 5five-year term and an exercise price of $4.80 per share. All outstanding RSUs, options, and warrants remain subject to applicable vesting, lock-up, and control restrictions.

Equity Line of Credit (ELOC)

On July 24, 2025, the Company entered into an ELOC Purchase Agreement (“Equity Line of Credit,” or the “ELOC Facility”) with an investor, whereby the Company has the right, but not the obligation, to sell to the investor therein, up to an aggregate of $25.0 million of shares of the Company’s common stock, par value $0.001 per share, subject to the terms and conditions set forth therein. The Purchase Agreement has a term ending on the earlier of (i) the first day of the month following the 18-month anniversary of the Commencement Date or (ii) the date the Investor has purchased the shares equal to the agreed investment amount. During the term, the Company may, at its discretion, deliver either Regular Purchase Notices for $500,000 to $2,000,000 per notice or Exempt Purchase Notices of up to $1,000,000 per notice. Each Regular Purchase is priced at 95% of the lowest daily VWAP during the applicable measurement period (or 80% if the Company’s stock is not trading on the Nasdaq Capital Market). In connection with each Regular Purchase, the Company will provide an estimate of the number of the shares deliverable, based on 90% of the prior day’s closing price. Each Exempt Purchase is priced similarly with an incremental 10% shares to be issued.

The Company will control the timing and amount of any sales of shares of common stock to Investor. Actual sales of shares of common stock to Investor as a drawdown under the ELOC Facility will depend on a variety of factors to be determined by the Company from time to time, which may include, among other things, market conditions, the trading price of the Company’s common stock and determinations by the Company as to the appropriate sources of funding for our business and operations.

CALLAN JMB INC.

(Formerly known as Coldchain Technology Services, LLC) 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024

The Company has the right to terminate the ELOC Facility at any time after the Commencement Date, for any reason or for no reason by delivering notice to the Investor electing to terminate the agreement without any liability except in the event the Company has sold less than $7,500,000 to the Investor, the Company shall pay an additional fee of $250,000 that is payable either in cash or in shares of Common Stock at a price equal to 100% of the Closing Price on the date immediately preceding the date of receipt by the Investor of the Company Termination Notice. The ELOC Facility will also automatically terminate upon reaching the $25,000,000 available amount or at the Maturity Date without any action or notice on the part of any party and without any liability whatsoever of any party to any other party under the ELOC Facility.

As consideration for Investor’s commitment to purchase the shares of common stock pursuant to the ELOC Facility, (i) the Company will reimburse the Investor for all actual costs and expenses incurred in connection with the transaction up to $50,000 and (ii) 15,000 shares of common stock as a commitment fee.

The ELOC Facility contains customary representations, warranties, conditions and indemnification obligations of the parties. The representations, warranties and covenants contained in such agreements were made only for purposes of such agreements and as of specific dates, were solely for the benefit of the parties to such agreements and may be subject to limitations agreed upon by the contracting parties.

The Company accounted its ELOC Facility as a purchased put option and is either equity-classified or liability-classified instruments based on an assessment of the agreement’s specific terms and applicable authoritative guidance in ASC 480, “Distinguishing Liabilities from Equity” and ASC 815, “Derivatives and Hedging”. The assessment considers whether the purchased put option is a freestanding financial instrument that would require classification as a liability under ASC 480, as well as whether the purchased put option would qualify for equity classification or require a liability classification after consideration of the guidance and criteria outlined in ASC 815, including whether the purchased put option are indexed to the Company’s own common shares and whether the holders could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions that impact classification. The Company also assessed embedded features in the ELOC Facility under the ASC 480 and ASC 815 guidance, management believed that these embedded features were not freestanding and are clearly and closely related to the host contract and as such do not require bifurcation from the purchased put option. This assessment, which requires the use of professional judgment, is conducted at the time of agreement. The Company assessed that the purchased put option is not under the scope of ASC 480 but is a derivative liability under ASC 815 as it does not meet the scope exception, indexation guidance and equity classification criteria under ASC 815 due to certain variability to the settlement price. As such, the Company accounted for the purchased put option as a derivative liability recognized at fair value at the inception date and each reporting period.

The fair value of the purchased put option was estimated on the date of agreement using Monte Carlo Simulation Model with the following assumptions at each measurement date:

SCHEDULE OF FAIR VALUE ASSUMPTIONS 

The risk-free interest rate was based on U.S. Treasury interest rates, the terms of which are consistent with the expected life of purchased put option. Expected volatility was derived using the Company’s peer volatility calculated from its peer companies’ volatilities over the time period commensurate with the expected life of the purchased put option. The expected life was calculated using the terms of the ELOC Facility.

The fair value of the purchased put option is $974,309 and $371,216 as of inception date and December 31, 2025, respectively. The Company recognized the fair value of the purchased put option as of December 31, 2025 in its balance sheet under the caption, “Derivative Liability.” The initial fair value of the purchased put option and the subsequent change in the Fair Value of the Derivative Liability between inception date and December 31, 2025 was recognized in the Company’s statement of operations for the year ended December 31, 2025.

SCHEDULE OF DERIVATIVE LIABILITY EQUITY LINE OF CREDIT  

There are no derivative liabilities as of December 31, 2024.

As of December 31, 2025, the Company has issued approximately 340,940 shares of Common Stock under the ELOC Facility for net proceeds of approximately $497,750.

During the year ended December 31, 2025, the Company recognized transaction expenses arising from the ELOC Facility of $569,552, which is included as part of “Other Expenses” in the Company’s statement of operations. $78,000 of this expense relates to the 15,000 commitment shares that are yet to be issued and are recognized as part of Additional Paid in Capital in the Consolidated Balance Sheet, the difference between the fair value of common shares issued and net proceeds which amounted to $389,302 and legal and other fees of $102,250.

Registration Rights Agreements

In connection with the ELOC Facility, the Company also granted the Investor certain registration rights for shares of common stock issuable within the ELOC Facility, including (a) the ability of a holder to request that the Company file a Form S-1 registration statement; (b) the ability of a holder to request that the Company file a Form S-3 registration statement with respect to outstanding registrable securities if at any time the Company is eligible to use a Form S-3 registration statement; and (c) certain piggyback registration rights related to potential future equity offerings of the Company, subject to certain limitations.

On August 24, 2025, the Company filed a registration statement on Form S-1 related to the resale, from time to time, of up to 6,000,000 shares of Common Stock in connection with the ELOC Facility. The Registration Statement on Form S-1 was declared effective September 22, 2025.

CALLAN JMB INC.

(Formerly known as Coldchain Technology Services, LLC) 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2025 and 2024