v3.26.1
Stockholders’ Equity
 12 Months Ended
Dec. 31, 2025
Equity [Abstract]  
Stockholders’ Equity

Note 7 – Stockholders’ Equity

 

The Company has four (4) classes of capital stock:

 

●Common stock;

●Series A 8% Cumulative Convertible Redeemable Preferred Stock; and

●Series B Convertible Preferred Stock
●Series C, D, E, F, G, H and S preferred stock

 

Authorized Capital Structure

 

The Company is authorized to issue 110,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

 

On October 27, 2025, the Company filed two Certificates of Amendment with the Texas Secretary of State, each effective as of that date.

 

The first amendment reduced the authorized shares of common stock from 6,000,000,000 shares to 100,000,000 shares, reduced the authorized shares of preferred stock from 20,000,000 shares to 10,000,000 shares, and reduced the par value of the preferred stock from $1.00 per share to $0.0001 per share. The par value of the common stock was unchanged.

 

The second amendment restated the conversion provisions of the Series A Preferred Stock, including the anti-dilution adjustment formula, to reflect the terms as they had been in effect since the original designation. No changes were made to the economic rights or preferences of the Series A Preferred Stock by the second amendment.

 

The board of directors is authorized, without further stockholder approval, to establish and designate one or more series of preferred stock from time to time and to fix the relative rights, preferences, limitations, and restrictions of each such series prior to issuance. These designations may include, but are not limited to:

 

●Dividend rights, including payment structure, rates, and priority relative to common stock.

●Voting rights, which may be full, limited, or non-voting.

●Redemption terms, including whether shares are redeemable at the option of the Company or the holder.

●Provisions for purchase, retirement, or sinking funds to support the redemption or repurchase of shares.

●Conversion and exchange rights, detailing the terms under which preferred shares may convert into common stock or other securities.

●Liquidation preferences, establishing the priority of preferred stockholders in the event of a voluntary or involuntary liquidation, dissolution, or winding up of the Company.

●Relative rights and ranking among different series of preferred stock.

 

F-46

 

 

As of December 31, 2025, the foregoing authorization and designation structure was in effect as described in this note. Subsequent to December 31, 2025, the Company filed an additional Certificate of Amendment that undesignated all previously designated series of preferred stock. See Note 11.

 

Preferred Stock - Series Designations

 

As of December 31, 2025, the Company had designated the following series of preferred stock under its authorized 10,000,000 preferred share pool. Subsequent to December 31, 2025, all series were undesignated and the shares were returned to the authorized but unissued preferred stock pool.

 

See Note 11.

 

Series A Preferred Stock

 

The Company had designated 5,450,000 shares of Series A 8% Cumulative Convertible Redeemable Preferred Stock at $0.0001 par value per share. The following is a summary of the material terms of the Series A Preferred Stock as set forth in the Company’s Certificate of Formation, as amended and in effect as of December 31, 2025:

 

●Dividends. Holders of Series A Preferred Stock were entitled to receive cumulative dividends at a rate of 8% per annum ($0.1064 per share per year), payable semi-annually on January 1 and July 1 of each year. Dividends were payable in cash or, at the Company’s election, in additional shares of Series A Preferred Stock valued at $1.33 per share.

●Liquidation Preference. Upon any liquidation, dissolution, or winding up of the Company, holders of Series A Preferred Stock were entitled to receive $1.33 per share plus all accumulated and unpaid dividends, prior to any distribution to holders of any other series of preferred stock or common stock.

●Conversion. Each share of Series A Preferred Stock was convertible, at the option of either the Company or the holder, at any time prior to the close of business on the fifth business day preceding any date fixed for redemption, into fully paid and nonassessable shares of common stock at a conversion ratio of 1 share of common stock for every 400 shares of Series A Preferred Stock surrendered. The conversion ratio was subject to adjustment for stock splits, stock dividends, combinations, reclassifications, and below-market issuances pursuant to a broad-based weighted average anti-dilution formula as set forth in the Company’s Certificate of Formation, as amended October 27, 2025.

 

●Redemption. The Company had the right to redeem the Series A Preferred Stock, in whole or in part, at any time after the second anniversary of the Final Closing Date, at a redemption price of $1.46 per share plus all accumulated and unpaid dividends, provided that the common stock had closed at or above $2.00 per share for 20 consecutive trading days prior to the date of the redemption notice. The Company was required to provide 30 days’ prior written notice of any redemption.

●Voting Rights. Holders of Series A Preferred Stock voted together with holders of common stock as a single class on all matters submitted to a vote of stockholders, with each holder entitled to cast one vote for each share of common stock into which such holder’s Series A Preferred Stock was then convertible.

 

Series B Preferred Stock

 

The Company had designated 9,000,000 shares of Series B Convertible Preferred Stock at $0.0001 par value per share. The following is a summary of the material terms of the Series B Preferred Stock as set forth in the Company’s Certificate of Formation, as amended and in effect as of December 31, 2025:

 

●Voting Rights. Holders of Series B Preferred Stock were entitled to 100 votes per share on all matters submitted to a vote of stockholders, voting together with holders of common stock as a single class.

●Conversion. Series B Preferred Stock was convertible into common stock at a ratio of 0.25 shares of common stock for every 1 share of Series B Preferred Stock surrendered (i.e., 1 share of common stock for every 4 shares of Series B Preferred Stock surrendered), subject to adjustment for stock splits and combinations.

 

Preferred Stock - Year Ended December 31, 2025

 

The Series A Preferred Stock and Series B Preferred Stock were originally issued in connection with the conversion of common stock into preferred stock. On October 30, 2025, all 435,085 shares of Series A Preferred Stock and all 192,000 shares of Series B Preferred Stock then issued and outstanding were converted into common stock. The conversion was effected as follows:

 

●The 435,085 shares of Series A Preferred Stock were converted into 1,101 shares of common stock at a conversion ratio of 1 share of common stock for every 400 shares of Series A Preferred Stock, with fractional shares rounded up to the nearest whole share.

●The 192,000 shares of Series B Preferred Stock were converted into 60,009 shares of common stock. The conversion utilized the contractual base ratio of 0.25 shares of common stock per share of Series B Preferred Stock, with a negotiated 125% conversion premium applied, resulting in an effective conversion rate of 0.3125 shares of common stock per share of Series B Preferred Stock surrendered. Fractional shares were rounded up to the nearest whole share.

 

Both conversions have been accounted for as reclassifications within stockholders’ equity, with the carrying amount of the converted preferred stock reclassified to common stock and additional paid-in capital. No gain or loss was recognized in connection with either conversion.

 

 

Following the October 30, 2025 conversions, no shares of preferred stock of any series remained issued and outstanding as of December 31, 2025.

 

Preferred Stock - Year Ended December 31, 2024

 

There were no preferred stock transactions during the year.

 

See Note 11 regarding the undesignation and removal of all classes of preferred stock.

 

Common Stock

 

-100,000,000 shares authorized

-$0.0001 par value

-Voting at 1 vote per share

 

Equity Transactions for the Year Ended December 31, 2025

 

Stock Issued for Cash

 

The Company issued 9,333,333 shares of common stock for $10,000,000 ($1.00 - $1.50/share). Of the total shares issued, 8,000,000 were sold to a related party, who is a principal stockholder for $8,000,000.

 

Common Stock Repurchase Agreement

 

The Company repurchased 4,000,000 shares of common stock from a stockholder for $2,500,000 ($0.60 - 0.75/share).

 

The repurchased shares were cancelled and retired upon acquisition and are no longer considered issued or outstanding. In accordance with FASB ASC 505-30, “Equity – Treasury Stock”, and consistent with the Company’s corporate charter and applicable state law, the cancelled shares were returned to the status of authorized but unissued, thereby increasing the number of shares available for future issuance.

 

The repurchase will be accounted for as a reduction to stockholders’ equity, with the purchase price allocated entirely to Additional Paid-in Capital (“APIC”), as the Company had sufficient APIC available from prior issuances. No gain or loss will be recognized in connection with this transaction. The cash outflow related to the stock repurchase will be classified as a financing activity in the statement of cash flow.

 

In conjunction with the stock repurchase, the Company also issued 500,000 freestanding warrants to the selling stockholder. The warrants have an exercise price of $1 and expire on December 31, 2026. The warrants were classified as equity instruments and recorded at fair value, with a corresponding credit to APIC. As the warrants were issued as part of the consideration for the share repurchase, their fair value was included in the total cost of the repurchase transaction, resulting in a net effect of $0 on total stockholders’ equity.

 

 

See Note 9 for warrants.

 

Stock Issued for Services

 

The Company issued 100,000 shares of common stock to a consultant for services rendered, having a fair value of $177,000 ($1.77/share), based upon the quoted closing trading price on the grant date.

 

Equity Transactions for the Year Ended December 31, 2024

 

Cash

 

The Company issued 1,500,000 shares of common stock for $1,400,000 ($0.80 - $1.00/share).

 

Stock Issued for Services

 

The Company issued 500,000 shares of common stock to a consultant for services rendered, having a fair value of $525,000 ($1.05/share), based upon the quoted closing trading price on the grant date.

 

Conversion of Note to Common Stock

 

The Company issued 375,000 shares of common stock in connection with the conversion of a $300,000 note payable. There was no gain or loss recorded on debt conversion.

 

See Note 5.