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

Note 5– Stockholders’ Equity

 

Common Stock

 

On March 27, 2025, the Company implemented a 1.0 for 40.0 reverse stock split. The reverse stock split was authorized by the Company’s Board of Directors on March 14, 2025. All common stock shares stated herein have been adjusted to reflect the split. The purpose of this reverse split was to ensure that the Company can meet the per share price requirements of the NYSE American.

 

During the three months ended March 31, 2026, we sold 3,165,118 shares of Common Stock for total gross proceeds of $1,371,976 pursuant to the ELOC Agreement and 266,770 shares for conversion of notes payable and accrued interest totaling $84,430. During the three months ended March 31, 2026, 24,252 shares of Preferred-B were converted into 1,940,120 shares of common stock.

 

During the three-months ended March 31, 2025, we issued 5,500 shares valued at $35,000 in exchange for services and 224,541 shares for conversion of notes payable and accrued interest totaling $1,665,953.

 

ELOC Letter Agreement

 

On January 26, 2026, the Company entered into an agreement (the “Letter Agreement”) with C/M Capital Master Fund, LP (the “Investor”) which Investor is the counterparty to that certain Securities Purchase Agreement dated September 19, 2025 establishing an equity line of credit facility between the Company and the Investor (the “ELOC Agreement”). Pursuant to the Letter Agreement, the Company in lieu of issuing the Investor shares of Common Stock referred to in the ELOC Agreement as the “Commitment Shares”, as such term is defined and described in the ELOC Agreement, the Company instead issued to the Investor a promissory note (the “Note”). The Note has an initial principal amount of $525,000, which shall be subject to increase up to $700,000 in connection with sales made under the ELOC Agreement which increase, if applicable, would reflect the additional 0.5% of Commitment Shares the Investor was previously entitled to receive under the ELOC Agreement. The Note bears no interest unless an event of default occurs whereupon interest accrues at a rate of 10% per annum and matures on January 26, 2028.

 

In addition, following the repayment of prior promissory notes originally issued on September 22, 2025 to the Investor and an affiliate, the Note is subject to mandatory prepayments from net proceeds received by the Company under the ELOC Agreement after the first $3 million of net proceeds equal to 30% of any further net proceeds.

 

ELOC Sales

 

During the three-months ended March 31, 2026, we sold 3,165,118 shares of Common Stock for total gross proceeds of $1,371,976 pursuant to the ELOC Agreement.

 

Preferred Stock

 

The Company evaluated the classification of the Preferred Stock and related warrants issued with the Series A-1 Preferred Stock in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815, Derivatives and Hedging. Based on this assessment, management determined that the Preferred Stock and warrants meet the criteria for equity classification. Specifically, the instruments are not mandatorily redeemable, do not embody obligations to repurchase the Company’s shares by transferring assets, and do not require settlement in a variable number of shares with a monetary value that is fixed, tied to a variable other than the Company’s own stock, or indexed to something other than the Company’s stock. The warrants are indexed solely to the Company’s Common Stock and meet the scope exception under ASC 815-10-15. Accordingly, the Preferred Stock and related warrants have been classified as components of stockholders’ equity in the accompanying condensed consolidated financial statements.

 

The Company has issued four series of preferred stock: Series A, A-1, B, and C, each with distinct rights and preferences as outlined below. Note agreements were amended to be exchanged for Preferred B and the impact of those amendments is subject to further review.

 

The Series A was automatically redeemed after the Company’s 2025 annual stockholders’ meeting.

 

 Voting Rights

 

  ● Series A-1 carries 180 votes per share.
  ● Series B and Series C do not carry any voting rights.

 

Dividends

 

  ● Series A-1 and Series B carry a fixed 12% annual dividend, payable quarterly in arrears, in either cash or payment-in-kind (PIK) at the Company’s discretion. These dividends are mandatory and take priority over any dividends on Common Stock, regardless of whether Common Stock dividends are declared. 
  ● Series C does not accrue dividends.

 

Conversion into Common Stock

 

  ● Series A-1 is convertible into Common Stock at 80% of the VWAP, subject to a floor of $1.25 and a ceiling of $4.00. A-1 is convertible into a range of 262,500 to 840,000 Common Stock.
  ● Series B is also convertible at 80% of the VWAP, with a floor of $1.25 and a ceiling of $6.00 and is convertible into a range of 2,118,333 to 10,168,000 Common Stock.
  ●

Series C is convertible at a fixed price of $3.00,. The parties agreed on April 9, 2026 that, notwithstanding anything in the Agreement or in any other agreements and documents between the parties to the contrary, the parties hereby agree to rescind and nullify the Transaction effective December 31, 2025. In the furtherance thereof, the Company hereby agrees to transfer the Purchased Assets to Utopia, and Utopia hereby agrees to surrender the Purchase Price consisting of 20,000 shares of the Company’s Series C Convertible Preferred Stock which were issued to Utopia, to the Company, in each case effective as of December 31, 2025. 

 

Redemption – at the sole discretion of the Company

 

  ●

Series A-1 and Series B are redeemable by the Company after two years from the date of issuance, for $1,300,000 and $9,850,000, respectively.

  ● Series C is not redeemable.

 

Seniority

 

  ● Series B is the most senior class (Seniority Level 1).
  ● Series A-1 ranks junior to Series B (Seniority Level 2).
  ● Series C is the most junior class (Seniority Level 3).

 

During the three months ended March 31, 2026, 24,252 shares of Preferred-B were converted into 1,940,120 shares of common stock.

 

During the year ended December 31, 2025, 3,979 shares of Preferred-B were converted into 328,779 shares of common stock.

 

Stock Plan

 

In July 2020, the Board adopted the 2020 Stock Incentive Plan (the “2020 Plan”), which provides for the grant of Options, Restricted Stock Awards, Stock Appreciation Rights, Performance Units and Performance Bonuses to consultants and eligible recipients. The total number of shares that may be issued under the 2020 plan was 152,383 as of March 31, 2026.

 

The 2020 Plan has an “evergreen” feature, which provides for the annual increase in the number of shares issuable under the plan by an amount equal to 5% of the number of issued and outstanding common shares at year end, unless otherwise adjusted by the board. In October 2023, the shareholders voted to increase the number of shares issuable under the Plan to 7.5%. At January 1, 2025 the number of shares issuable under the 2020 plan increased by 125,358 During the three months ending March 31, 2026 the Board of Directors agreed to cease increases to the plan.

 

2025 Equity Incentive Plan

 

On September 25, 2025 the Company adopted the 2025 Equity Incentive Plan covering 5,315,780 shares of Common Stock of which have been or may be issued or may be issuable to employees, non-employee directors, officers, consultants and advisors of the Company and its subsidiaries. As of March 31, 2026, that have been no grants under the Plan.

 

The following is a summary of the Company’s stock option activity:

 

                     
Options   March 31, 2026  March 31, 2025
   Number of Options  Weighted Average Exercise Price  Number of Options  Weighted Average Exercise Price
             
Balance - January 1*    204,254   $30.39    216,212   $29.60 
                      
Granted    —    —    15,000    6.04 
Exercises    —    —    —    — 
Cancelled    3,888    13.20    12,500    13.20 
                      
Balance – March 31,     200,366   $30.54    216,100   $28.80 
                      
 Exercisable – March 31,     194,408   $30.76    184,090   $31.68 

 

 

During the three-month period ended March 31, 2026 and March 31, 2025, the company granted 0 and 15,000 options to new employees under the 2020 plan.

 

The fair value of stock options granted in March 31, 2025   has been measured at $90,587 using the Black-Scholes option pricing model with the following assumptions: exercise price $6.04, expected life 10 years, expected volatility 254%, expected dividends 0%, risk free rate 4.0%.

 

Common Stock Issuable, Liability to Issue Stock and Shareholder Advances

 

Outstanding balance for shareholder advances on March 31, 2026 and 2025 was $0 and $200,000 respectively.