NOTE 10 – STOCKHOLDERS’ EQUITY

The Company’s authorized capital structure and the rights and preferences of its equity securities are described in Note 12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

As of June 30, 2026, the Company had multiple series of preferred stock outstanding.

During the three months ended June 30, 2026, the Company approved the creation of two new series of preferred stock designated as the Series A.1 Preferred Stock and the Series D.1 Preferred Stock. The Certificates of Designation for Series A.1 Preferred Stock and Series D.1 Preferred Stock, which created the Series A.1 Preferred Stock and Series D.1 Preferred Stock, were filed with the State of Nevada on January 30, 2026. A detailed discussion of the rights and preferences of the Series A.1 Preferred Stock and Series D.1 Preferred Stock can be found in the Company’s Current Report on Form 8-K, filed with the SEC on January 30, 2026.

Subsequent to the three months ended June 30, 2026, the Company approved the creation of a new series of preferred stock designated as Series E Preferred Stock. The Certificate of Designation for Series E Convertible Preferred Stock was filed with the State of Nevada on April 30, 2026. A detailed discussion of the rights and preferences of the Series E Preferred Stock can be found in the Company’s Current Report on Form 8-K, filed with the SEC on April 30, 2026.

Sales and Other Issuances of Preferred Stock

During January 2026, the Company entered into a short-term consulting arrangement with a third-party consultant for advisory services. As consideration for the services provided, the Company issued 1,667 shares of Series A.1 Preferred Stock. The fair value of $3,245 was recorded as a consulting expense within general and administrative expenses during the period.

During January 2026, a promissory note with a third-party investor in the principal and interest amount of $58,000 was converted into 134,884 shares of Series D.1 Preferred Stock upon the Company filing a Certificate of Designation to create such series of preferred stock at a price of $0.43 per share. As noted, the Certificate of Designation for Series D.1 Preferred Stock was filed with the State of Nevada on January 30, 2026.

During January 2026, the Company entered into agreements where the Company agreed to issue 232,558 shares of Series D.1 Preferred Stock upon the Company filing a Certificate of Designation to create such series of preferred stock at a sale price of $0.43 per share for gross and net proceeds of $100,000 in a private placement transaction. As noted, the Certificate of Designation for Series D.1 Preferred Stock was filed with the State of Nevada on January 30, 2026.

During January 2026, the Company entered into agreements where the Company agreed to issue 323,530 shares of Series E Convertible Preferred Stock, upon the Company filing a Certificate of Designation to create such series of preferred stock at a sale price of $0.34 per share for gross and net proceeds of $110,000 in two separate private placement transactions. In connection with the agreements, the Company issued to the buyers five-year warrants to purchase up to an aggregate of 323,530 shares of Company common stock at an exercise price of $1.00 per share. As noted, the Certificate of Designation for Series E Convertible Preferred Stock was filed with the State of Nevada on April 30, 2026.

Sales of Common Stock

During May 2026, the Company entered into a consulting arrangement with a third-party consultant for advisory services. As consideration for the services provided, the Company issued 500,000 shares of Common Stock. The fair value of $160,050 was recorded as a consulting expense within general and administrative expenses during the three- and six-month periods ended June 30, 2026.

During June 2026, the Company sold 476,191 shares of common stock and 714,287 five year warrants with an exercise price of $0.30 for an aggregate purchase price of $100,000. The fair value of the warrants was $50,996.

Equity Purchase Agreement

The Company has an Equity Line of Credit (“ELOC”) arrangement with a third-party investor, as described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025. During the six months ended June 30, 2026, the Company issued 187,082 shares of its common stock under the ELOC and received gross proceeds of $101,993 against fees of $9,636, for net cash proceeds due of $92,356, which was recorded as an increase to stockholders’ equity.

Warrants

Transactions involving our stock warrants during the six months ended June 30, 2026 and 2025, are summarized as follows:

The aggregate grant date fair value of warrants granted during the six months ended June 30, 2026 and 2025, was $211,273 and $990,614, respectively.

The following table summarizes information about the Company’s stock warrants outstanding as of June 30, 2026:

For additional information regarding the Company’s equity transactions, including detailed terms of preferred stock, warrants, and prior period activity, see Note 12 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2025.

RSU Plans

On April 12, 2025, the Company adopted the Dynamic Aerospace Systems Corporation Restricted Stock Unit (RSU) Executive Plan (the “Executive RSU Plan”) and the Dynamic Aerospace Systems Corporation Restricted Stock Unit (RSU) Plan (the “Non-Executive RSU Plan” and, together with the Executive RSU Plan, the “RSU Plans”). As of the date of this Quarterly Report, the Company did not have a stock option plan in favor of any director, officer, consultant, or employee. 

The purpose of the RSU Plans is to provide an equity compensation program to attract, retain, and incentivize key employees. Each Restricted Stock Unit (“RSU”) is a promise to deliver one share of the Company’s common stock upon vesting, subject to certain terms. The Company has the right to determine the specific grant details for each executive. Pursuant to the Executive RSU Plan, RSUs will vest 10% at the end of the first year after the grant; 30% at the end of the second year after the grant; and 60% at the end of the third year after the grant. Pursuant to the Non-Executive RSU Plan, RSUs will vest 10% at the end of the first year after the grant; 15% at the end of the second year after the grant; 25% at the end of the third year after the grant; 30% at the end of the fourth year after the grant; and 20% at the end of the fifth year after the grant. The vested RSUs will be settled in shares of the Company’s common stock six (6) months after the vesting date.

The following table summarizes RSU Plans activity as of and for the six months ended June 30, 2026 and 2025:

As of June 30, 2026, there was $4,168,692 of total unrecognized compensation cost related to stock grants made under the RSU Plans. The aggregate fair value of share grants that vested during the six months ended June 30, 2026 and 2025, was $211,932 and $-0-, respectively. Stock based compensation expense related to the RSU Plans was $398,847 and $-0- in the six months ended June 30, 2026 and 2025, respectively, and $794,868 and $-0- in the three months ended June 30, 2026 and 2025, respectively. The Company also recognized stock-based compensation related to shares issued to consultants outside of the RSU Plans in the amount of $160,050 and $-0- in three months ended June 30, 2026 and 2025, respectively, and $163,295 and $-0- in six months ended June 30, 2026 and 2025, respectively.