v3.26.1
Stockholders’ Deficit and Mezzanine Equity
 3 Months Ended
Mar. 31, 2026
Stockholders’ Deficit and Mezzanine Equity [Abstract]  
Stockholders’ Deficit and Mezzanine Equity
7.Stockholders’ Deficit and Mezzanine Equity

 

Preferred Stock

 

The Series A Preferred Stock is classified as mezzanine equity because, upon the occurrence of certain contingent events outside the Company’s control, the holders may require redemption for cash at the Liquidation Value

 

Attributes of Series A Preferred Stock include but are not limited to the following: 

 

Distribution in Liquidation 

 

The Series A Preferred Stock has a liquidation preference of $10,000,000, payable only upon certain liquidity events or upon the achievement of a market value of our equity equaling $200,000,000 or more. Upon any liquidation, dissolution or winding up of the Company, and after paying or adequately providing for the payment of all its obligations, the remainder of the assets of the Company shall be distributed, either in cash or in kind, first pro rata to the holders of the Series A Preferred Stock in an amount equal to the Liquidation Value (as described below); then, to any other series of Preferred Stock, until an amount to be determined by a resolution of the Board of Directors prior to issuances of such Preferred Stock, has been distributed per share, and, then, the remainder pro rata to the holders of the Common Stock. Upon the occurrence of any Liquidation Event (as defined below), each holder of Series A Preferred Stock is entitled to receive a payment equal to the Original Issue Price per share (the “Liquidation Value”). A “Liquidation Event” will have occurred when:

   

●The Company has an average market capitalization (calculated by adding the value of all outstanding shares of Common Stock valued at the Company’s closing sale price on the OTC Market or other applicable bulletin board or exchange, plus the value of the outstanding Series A Preferred Stock at the Original Issue Price per share) of $200,000,000 or more over any 90 day period. The holders of the Series A Preferred Stock would have the right, for 30 days after the end of such qualifying 90 day measurement period, to require the Company to purchase the Series A Preferred Stock for an amount equal to the Liquidation Value.
●Any Liquidity Event in which the Company receives proceeds of $50,000,000 or more. For purposes hereof, a “Liquidity Event” means any (a) liquidation, dissolution or winding up of the Company; (b) acquisition of the Company by means of any transaction or series of related transactions (including, without limitation, any reorganization, merger, share exchange, share purchase or consolidation) provided that the applicable transaction shall not be deemed a liquidation unless the Company’s stockholders constituted immediately prior to such transaction hold less than 50% of the voting power of the surviving or acquiring entity; or (c) the sale, lease, transfer or other disposition, in a single transaction or series of related transactions, by the Company or any subsidiary of the Company of all or substantially all the assets of the Company and its subsidiaries taken as a whole, or the sale or disposition (whether by merger or otherwise) of one or more subsidiaries of the Company if substantially all of the assets of the Company and its subsidiaries taken as a whole are held by such subsidiary or subsidiaries.

 

Redemption

 

The Series A Preferred Stock may be redeemed in whole or in part as determined by a resolution of the Board of Directors at any time, at a price equal to the Liquidation Value.

 

Voting Rights

 

Shares of Series A Preferred Stock shall have no rights to vote on any matter submitted to a vote of shareholders, except as required by law, in which case each share of Series A Preferred Stock shall be entitled to one vote.

 

Conversion Rights 

 

Holders of Series A Preferred Stock will have no right to convert such shares into any other equity securities of the Company.

 

Common Stock

 

As of March 31, 2026, and December 31, 2025, the Company is authorized to issue 500,000,000 shares of common stock at a par value of $0.001 per share.

 

Voting Rights

 

Holders of our common stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors.

 

Dividend Rights

 

Holders of our common stock are entitled to receive dividends when, as and if declared by our board of directors out of funds legally available for this purpose.

 

Liquidation Preference

 

In the event of our liquidation, dissolution or winding up, holders of our common stock are entitled to receive on a proportional basis any assets remaining available for distribution after payment of our liabilities and Series A Preferred Stock.

Other Terms

 

Holders of common stock have no conversion, preemptive or other subscription rights and there are no sinking fund or redemption provisions applicable to the common stock. All outstanding shares of the common stock are fully paid and non-assessable.

 

Common Stock Issuances, Stock-Based Compensation, and Retirements

 

The following table summarizes the Company’s issuances and (retirement) of common stock during the periods ending March 31, 2026 and 2025:

 

Date  Shares
Issued		   Purpose  Fair Value
per Share(1)		   Total Value 
Q1 2026   875   Development Committee   8.99(1)    7,866 
Q1 2026   1,050   Advisory Board   8.00(1)    8,400 

  

1) Stock-Based Compensation – Advisory Board and Development Committee: The Company issues restricted shares of common stock to members of its Advisory Board and Development Committee as compensation for advisory, strategic, and development-related services. Such awards are non-employee stock-based compensation arrangements and are accounted for in accordance with ASC 718, Compensation—Stock Compensation. The fair value of the shares issued is measured on the grant date based on the closing market price of the Company’s common stock and is recognized as stock-based compensation expense over the period in which the related services are rendered. All shares issued under these arrangements are fully vested upon issuance and are subject to the terms of the applicable advisory or committee agreements.

 

All issuances were accounted for in accordance with ASC 505-10 (Equity) and ASC 718 (Compensation—Stock Compensation), as applicable. No gain or loss was recognized on the debt conversions, as the carrying amount of the debt equaled the fair value of the equity issued. Advisory Board compensation was recorded as general and administrative expense, with a corresponding credit to additional paid-in capital.