PREFERRED STOCK

3 Months Ended

Mar. 31, 2026

Equity [Abstract]

PREFERRED STOCK

Note 14 PREFERRED STOCK

Series A Preferred Stock

In August 2021, the Company issued 80,000 shares of Series A preferred stock, par value $0.001 per share (the “Series A Preferred Stock”) at an issue price of $2.50 per share to certain investors. The Series A Preferred Stock is non-voting and non-redeemable. The holder of the Series A Preferred Stock will have priority over the holders of Common Stock of the Company on the assets and funds of the Company in a distribution of assets in the event of a liquidation, winding up or dissolution of the Company.

On August 11, 2022, the Company effected a 2:3 reverse stock split for each share of Common Stock issued and outstanding. As a result of this reverse stock split, the shares of Common Stock issuable upon the conversion of Series A Preferred Stock decreased from 80,000 shares to 53,334 shares.

As of March 31, 2026 and 2025, there were 80,000 shares of Series A Preferred Stock issued and outstanding.

Series B Preferred Stock

On August 28, 2025, the Company filed a Certificate of Designation of Preferences, Rights and Limitations with the Secretary of State of Nevada, designating up to 1,000,000 shares of series B preferred stock, par value $0.001 per share (the “Series B Preferred Stock”). Each share of Series B Preferred Stock has a stated value of $1,000.

On August 29, 2025, the Company entered into a securities purchase agreement (the “Series B Preferred Purchase Agreement”) with an institutional accredited investor (the Series B Preferred Investor”). Pursuant to the Series B Preferred Purchase Agreement, the Company sold 3,500 shares of Series B Preferred Stock to the Series B Preferred Investor at a purchase price of $910 per share. The aggregate purchase price received by the Company was $2,635,000, net of issuance cost of $550,000. The Company may, subject to certain conditions, sell up to an additional 10,000 shares of Series B Preferred Stock to the Series B Preferred Investor in one or more subsequent closings.

The key terms of the Series B Preferred Stock are as follows:

	·	Dividends: Beginning October 1, 2025, holders are entitled to receive mandatory monthly dividends at an annual rate of 9.0% of the aggregate stated value. Dividends are payable in cash or, at the Company’s option, in shares of the Common Stock.
	·	Conversion: The Series B Preferred Stock is convertible at any time at the option of the holder into shares of Common Stock. The conversion price is $1.80 per share of Common Stock, subject to adjustment. The conversion is subject to a beneficial ownership limitation which prohibits a holder from converting if, after conversion, the holder would own in excess of 4.99% (or 9.99% upon election) of the total outstanding Common Stock.
	·	Ranking: The Series B Preferred Stock ranks senior to the Common Stock and the Series A Preferred Stock with respect to preferences on dividends, distributions, and payments upon liquidation.
	·	Voting Rights: The Series B Preferred Stock has no voting rights.
	·	Redemption: The Series B Preferred Stock is redeemable at the Company’s option at any time. Holders have the option to require the Company to redeem the shares at any time after the two-year anniversary of the initial issuance date. Upon the occurrence of certain events of default, holders may require a mandatory redemption at a price equal to 125% of the stated value plus any accrued and unpaid dividends.

The Series B Preferred Stock is redeemable upon the occurrence of a deemed liquidation event that is not solely within the control of the Company and is classified as mezzanine equity on the consolidated balance sheets. The carrying values of Series B Preferred Stock have not been adjusted to their liquidation preferences as these events have not occurred through March 31, 2026. Carrying values will be adjusted to their liquidation preferences if and when it becomes probable that such events will occur.

The conversion feature of the Series B Preferred Stock permits holders to convert into a fixed number of shares of the Common Stock at a fixed conversion price, subject to customary anti-dilution adjustments. The Company concluded that the conversion feature qualifies for the equity scope exception under ASC 815, Derivatives and Hedging, and therefore was not bifurcated as an embedded derivative.

As of March 31, 2026, the Company did not have any financial liabilities subject to amortized cost measurement.

The Series B Preferred Stock was initially recognized at issuance proceeds, net of issuance costs. The Company evaluates whether it is probable that the Series B Preferred Stock will become redeemable. If and when redemption becomes probable, the carrying amount will be accreted to its redemption value.

The carrying amount of the Series B Preferred Stock is not adjusted for discounts through amortization to interest expense. Any differences between the initial carrying amount and the redemption value will be recognized as accretion to redemption value when redemption becomes probable, with corresponding adjustments recorded to retained earnings (or additional paid-in capital, if retained earnings are insufficient).