v3.26.1
Stockholders’ Equity
 6 Months Ended
Jun. 30, 2026
Equity [Abstract]  
Stockholders’ Equity

Note 11 – Stockholders’ Equity

 

Preferred Stock

 

Shares Outstanding

 

The Company is authorized to issue up to 30,000,000 shares of Preferred Stock, par value $0.0001 per share.

 

Series A Preferred Stock

 

The Company designated 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges.

 

Dividends. Holders of shares of Series A Preferred Stock are not entitled to receive dividends.

 

Voting Rights. Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of the holders of Common Stock, voting together with the holders of Common Stock as a single class. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board of Directors.

 

Other Rights. Shares of Series A Preferred Stock are not entitled to a liquidation preference. The holders of the Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holders of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights.

 

Share exchange

 

On May 28, 2026, the Company entered into Stock Exchange and Stockholders Agreements (the “Exchange Agreements”) with the holders (the “Holders”) of the Company’s outstanding Series A Preferred Stock. Pursuant to the Exchange Agreements, the Company reacquired an aggregate of 1,666,667 shares of Series A Preferred Stock. At closing, the Company issued 103,558 shares of Series C Convertible Preferred Stock to BoltRock Holdings, LLC (“BRH”), and agreed to issue 467,012 shares of Series C Preferred Stock to TC Special Investments LLC (“TCSI”) on the date that is 18 months after closing, unless issued earlier in connection with a change of control of the Company which, under the TCSI Exchange Agreement, includes the appointment of Theodore S. Ralston to the Company’s board of directors (collectively, the “Exchange Shares”). As a result, the Company recorded the 103,558 shares of Series C Preferred Stock issued to BRH, and the Series C Preferred Stock payable representing the 467,012 shares to be issued to TCSI, as additional paid-in capital.

 

As of June 30, 2026 and December 31, 2025, there were 0 and 1,666,667, respectively, shares of Series A Preferred stock issued and outstanding.

 

Series C Convertible Preferred Stock

 

The Company has designated 10,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock with the following rights and privileges.

 

Dividends. Holders of shares of Series C Convertible Preferred Stock are not entitled to receive dividends.

 

Voting Rights. The holders of the Series C Convertible Preferred Stock are not entitled to vote.

 

Conversion Rights. Each share of Series C Convertible Preferred Stock outstanding shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into 3.3333 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and the rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment.

 

Other Rights. The holders of the Series C Convertible Preferred Stock are not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holders of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights.

  

During the six months ended June 30, 2026, the Company issued 103,558 shares of Series C Convertible Preferred Stock to BRH and 467,012 shares to be issued to TCSI.

 

During the six months ended June 30, 2025, the Company issued 344,007 shares of Series C Convertible Preferred Stock as follows:

 

·27,500 shares for purchase subscriptions of $260,000, at prices of $4.00 or $6.00 per share
·236,507 shares for services, valued at $4,860,875 at market price on issuance dates.
·80,000 shares for compensation, valued at $1,520,720 at market price on issuance dates.

 

During the six months ended June 30, 2026, the holders of the Convertible Series C Preferred Stock converted 699,077 shares of the Company’s Convertible Series C Preferred Stock into 2,330,273 shares of the Company’s common stock, respectively.

 

As of June 30, 2026 and December 31, 2025, there were 212,149 and 807,668 shares of the Company’s Series C Convertible Preferred Stock issued and outstanding, respectively.

 

Common Stock

 

The Company has authorized 1,000,000,000 shares of common stock with a par value of $0.0001. Each share of common stock entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought.

 

During the six months ended June 30, 2026, the Company issued 3,990,659 shares of Common Stock as follows:

 

·2,330,273 shares for conversion of 699,077 shares of Series C Preferred Stock
·1,112,677 shares for conversion of debt of $3,517,783
·55,333 shares for service, valued at $443,377
·189,042 shares for cash and cashless exercise of warrants, for cash proceeds of $25,002
·220,000 shares for stock payable for acquisition of IP, valued at $1,775,400, which was recorded as additional paid in capital as of December 31, 2025. 
·83,334 shares for management compensation valued at $566,672

 

During the six months ended June 30, 2025, the Company issued 29,245,272 shares of common stock as follows:

 

  · 26,189,380 shares for conversion of Series C Preferred Stock.
  · 3,045,892 shares for conversion of debt of $5,604,442.
  · 10,000 shares for services, valued at $19,000.

 

As of June 30, 2026 and December 31, 2025, there were 22,512,974 and 18,522,315 shares of the Company’s common stock issued and outstanding, respectively.

 

Restricted stock units (RSU)

 

On June 27, 2025 (the “Effective Date”), the Company entered into the employment agreement with our Chief Operating Officer (“COO”), commencing on July 21, 2025. Under this agreement, the Company issued 150,000 restricted shares of the Common Stock as stock bonus. Shares shall vest one-fourth each anniversary of the Effective Date. The grant date fair value of shares is $1,799,970.

 

On September 22, 2025, the Company entered into the employment agreement with our new Chief Executive Officer (“CEO”), commencing on October 1, 2025 (the “Effective Date”). Under this agreement, the Company issued 300,000 restricted shares of the Common Stock as stock bonus. Shares shall vest one-fourth on first anniversary of the Effective Date and the remaining three-fourths on monthly basis over the following 36 months. The grant date fair value of shares is $1,698,000.

 

During the three and six months ended June 30, 2026, the Company recorded compensation expense of $218,623 and $437,246, respectively. As of June 30, 2026, unrecognized compensation cost for unvested equity awards was $2,729,603.

 

Management stock compensation (PSU)

 

During 2025, the Company entered into employment and consulting agreements with our CEO, former CEO, COO and a Director. The stock compensation based on market capitalization condition is as follows:

Market

capitalization for

30 consecutive days

  

Consulting agreement Former

CEO and Chairman

  

Consulting agreement

Chairman

  

Employment

agreement COO

  

Employment

agreement CEO

$ 120,000,000   70,000 Series C Convertible Preferred Stock   70,000 Series C Convertible Preferred Stock   –   –
$ 150,000,000   70,000 Series C Convertible Preferred Stock   70,000 Series C Convertible Preferred Stock   37,500 common stock   75,000 common stock
$ 200,000,000   70,000 Series C Convertible Preferred Stock   70,000 Series C Convertible Preferred Stock   37,500 common stock   75,000 common stock
$ 250,000,000   70,000 Series C Convertible Preferred Stock   70,000 Series C Convertible Preferred Stock   37,500 common stock   75,000 common stock
$ 300,000,000   –   –   37,500 common stock   75,000 common stock
                   
  Fair value ($)   1,932,000   3,165,000   1,740,000   1,580,000
  Forfeiture Protection   Vests upon completion of Initial Term; awards survive termination   Vests upon completion of Initial Term; awards survive termination   Forfeited if terminated for cause or resignation   Forfeited if terminated for cause or resignation

 

The Company used the Monte Carlo model to calculate the fair value of compensation and estimated a total of the grant date fair value of $8,417,000. The Company records compensation expense over the term of a derived service period unless the condition is satisfied at an earlier date. During the three and six months ended June 30, 2026, the Company recorded compensation expense of $517,372 and $2,414,927, respectively. As of June 30, 2026, unrecognized compensation cost for unvested equity awards was $192,671 which is expected to be recognized over a remaining weighted-average period of 0.24 years.

 

As of June 30, 2026, market capitalization performance conditions had been achieved with respect to certain outstanding equity incentive awards. Theodore Ralston, the Company’s former Chief Executive Officer, and BoltRock Holdings, LLC, a Company controlled by the Company’s Chairman, each became eligible to receive 140,000 shares of Series C Convertible Preferred Stock, but each has elected to defer receipt of such shares. In addition, Wesley Bolsen, the Company’s Chief Executive Officer, and Andrew Hotsko, the Company’s Chief Operating Officer, became eligible to receive 75,000 and 37,500 shares of common stock, respectively, subject to approval by the Compensation Committee. No shares underlying these awards had been issued as of June 30, 2026.

 

For the year ended December 31, 2025, the estimated fair values of the awards were measured using the following significant assumptions: 

       
Derived service period     0.51 - 1.05 year  
Risk-free interest rate     3.62% - 3.97%  
Stock price at valuation date   $ 5.66 - 12.00  
Expected average volatility     108.5% - 151.0%  
First Capitalization Threshold per share price   $ 6.85 - 14.28  
Second Capitalization Threshold per share price   $ 8.56 - 19.02  
Third Capitalization Threshold per share price   $ 11.42 - 23.82  
Fourth Capitalization Threshold per share price   $ 14.27 - 28.56  

 

Warrants

 

In April 2026, the Company issued 46,250 warrants to a related party F for services. The warrant is for a period of five years at an exercise price per share of $3.00. The Company recorded the warrants value of $361,801 to additional paid-in capital.

 

We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815. In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

 

The warrants are valued using a Black Scholes valuation model. The use of this valuation model requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.

 

The Company utilized the following assumptions: 

     
   June 30, 
   2026 
Expected term   5.00 years 
Expected average volatility   89% 
Risk-free interest rate   3.95% 
Expected dividend yield   – 

 

A summary of activity of the warrants during the six months ended June 30, 2026 is as follows:

               
   Warrants Outstanding     
       Weighted Average   Weighted Average Remaining Contractual Life 
   Shares   Exercise Price   (in years) 
                
Outstanding, December 31, 2025   2,909,434   $3.66    4.37 
Granted   46,250    3.00    5.00 
Exercised   (201,043)   0.56    – 
Outstanding, June 30, 2026   2,754,641   $3.67    3.88 
                
Exercisable, June 30, 2026   2,421,307   $4.41    3.94 

 

The intrinsic value of the warrants as of June 30, 2026 is approximately $5.0 million.