Note 15 – Series A and D preferred shares subject to possible redemption

On May 7, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) where the Company sold to GHS Investments, LLC, a Nevada limited liability company (the “Investor”) 250 shares of Series A Preferred Stock, $0.0001 par value per share (the “Series A Shares”) at a purchase price of $1,000 per Series A Share for an aggregate purchase price of $250,000. The Series A Shares have a face value of $1,200 per share and are convertible into shares of Common Stock (the “Conversion Shares”) at a conversion price of $0.112 in accordance with the certificate of designations to be filed with the State of Delaware. The Series A Shares carry cumulative dividends of twelve percent (12%) per annum, payable quarterly. On the earlier of the (1) 120th calendar day following the Closing and (2) the date the Common Stock is listed on a national exchange (the “Corporation Redemption Payment Date”), the Corporation shall have the obligation to redeem the preferred stock for an amount equal to 100% of the outstanding stated value of the preferred stock, plus any accrued but unpaid dividends, plus all other amounts due to the Holder. 

On September 19, 2025, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Y. K. Capital Management, Inc. (the “Series D Investor”), whereby the Series D Investor agreed to purchase 2,000 shares of Series D preferred stock, $0.0001 par value per share (the “Series D Shares”), at a purchase price of $1,000 per Series D Share. On the initial closing, the Series D Investor purchased five hundred (500) Series D Shares for a purchase price of $500,000. The second closing will be for the purchase of five hundred (500) Series D Shares for the aggregate purchase price of $500,000 before October 30, 2025 and the third and final closing will be for the purchase of one thousand (1,000) Series D Shares for the aggregate purchase price of $1,000,000 prior to the Company’s application for uplisting to the NYSE or Nasdaq.

The Series D Shares have a stated value of $1,000 per share (the “Stated Value”) and shall bear dividends at the rate of 8% per annum, for so long as the Series D Shares have not been redeemed or converted. The Series D Shares are convertible into shares of Common Stock of the Company at a conversion price of $0.1180 (the “Conversion Price”) as set forth in in the Certificate of Designations, to be filed with the State of Delaware (the “Certificate of Designations”). The Series D Investor shall not convert into Common Stock any amount of Series D Shares which would render the holder having more than 4.99% of the total outstanding shares of common stock of the Company. On the earlier of the (1) 120th calendar day following the Closing and (2) the date the Common Stock is listed on a national exchange (the “Corporation Redemption Payment Date”), the Corporation shall have the obligation to redeem the Preferred Stock for an amount equal to 100% of the outstanding Stated Value of the Preferred Stock, plus any accrued but unpaid dividends, plus all other amounts due to the Holder. 

On October 10, 2025, the Company entered into another Securities Purchase Agreement (the second SPA) with the Investor, whereby the Investor agreed to purchase 50 shares of the Company’s existing Series A Shares, in consideration of the Series A Investor’s consent for the Company to enter into previously disclosed transactions including: (A) creating the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, (B) issuing 5,000 shares of the Series B Stock (which contain 20-1 super voting rights), 9,500 shares of the Series C Stock in a transaction pursuant to which the Company will acquire certain assets owned by James Li, the Company’s Chief Executive Officer, and (C) issuing a convertible promissory note in favor of an affiliate of James Li in the aggregate principal amount of $3,000,000.

The Series A Shares have a stated value of $1,200 per share, and bear dividends at the rate of 12% per annum, for so long as the Series A Shares have not been redeemed or converted. The Series A Shares are convertible into shares of Common Stock of the Company at a conversion price of $0.112.

The Company accounts for its Series A and D preferred shares in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (ASC 480). Series A and D preferred shares subject to mandatory redemption (if any) will be classified as a liability instrument and will be measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) will be classified as temporary equity. At all other times, ordinary shares will be classified as shareholders’ equity. In accordance with ASC 480-10-S99, the Company classifies the Series A and D preferred shares outside of permanent equity as the shares are subject to possible redemption after 120 days of closing. The Company recorded the Series A and D preferred shares as temporary equity with accrued dividend included in redemption value.

As of September 30, 2025, the Series A and D preferred shares subject to possible redemption reflected in the balance sheets are reconciled in the following table:

The Company issued 300 Series A and 500 Series D shares in October 2025.