STOCKHOLDERS' DEFICIT |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Equity [Abstract] | |
| STOCKHOLDERS' DEFICIT | NOTE 4 – STOCKHOLDERS' DEFICIT
Preferred Stock
The Company has authorized shares of preferred stock, par value $ per share. As of June 30, 2026, one () share of Series A Preferred Stock (the "Special 2020 Series A Preferred Control Share") was issued and outstanding, held by an entity controlled by Brent Nelson, following its transfer at closing of the Kepler transaction on February 27, 2026. The Control Share carries 60% voting power in the Company. See Note 7.
Common Stock
Effective May 1, 2026, the Company filed a Certificate of Amendment with the Texas Secretary of State reducing its authorized common stock, par value $ per share from shares to shares. As of June 30, 2026 shares were issued and were outstanding. As of December 31, 2025, shares of common stock were issued and outstanding, respectively. During the six months ended June 30, 2026, shares were returned by Pinnacle Consulting Services, Inc. and shares were returned by a third-party shareholder to the Company at no cost. These shares are recorded as Treasury Stock on the Company’s balance sheet at June 30, 2026. See Note 7.
During the six months ended June 30, 2026, the Company issued shares of common stock pursuant to conversion notices received from holders of outstanding convertible notes. See Note 7.
In January 2026, the Company entered into agreements with third-party service providers in exchange for compensation of shares of common stock with fair values of $-$ per share. Compensation expense totaling $ is included in selling, general and administrative expense in the Company’s statement of operations for the six-month period ended June 30, 2026. In May 2026, the Company entered into an agreement with a third-party service provider in exchange for compensation of shares of common stock with a fair value of $ per share. Compensation expense totaling $ is included in selling, general and administrative expense in the Company’s statement of operations for the three- and six-month periods ended June 30, 2026.
Cancellation of Legacy Share Issuances
In March, 2026, the Company obtained an amended default judgment in the Superior Court of Washington, King County, rescinding certain legacy asset purchase agreements and declaring void ab initio the prior issuance of an aggregate shares of the Company’s common stock. Pursuant to the order, the Company’s transfer agent was authorized and directed to cancel such shares and correct the Company’s stock ledger accordingly.
Common Stock Issuable
The Company had recorded common stock issuable of $240,000 representing shares of common stock required to be issued under Section 3.3 of the Master Sales Agreement in connection with the Kepler reverse recapitalization that closed on February 27, 2026. The shares were issued in April 2026. This issuance represents the fulfillment of a pre-existing contractual obligation arising from the acquisition transaction and does not constitute a new compensatory or financing issuance. See Note 9.
Pursuant to the Master Sales Agreement, RH2 Equity Partners, LP is entitled to receive 1,000,000 shares of post-reverse-split common stock, vesting quarterly over 36 months, in consideration of extended advisory services to be provided to the combined entity. See Notes 7 and 9.
Prepaid Warrants
Between January 1, 2026, and May 1, 2026, the Company entered into a Master Prepaid Common Stock Purchase Warrant Agreement (the “Agreement”) with Pinnacle Consulting Services, Inc. (“Pinnacle”) establishing a prepaid warrant financing facility of up to $3,000,000 (the “Facility”). The warrants issued under the Facility are exercisable for shares of the Company’s common stock at a fixed exercise price of $0.05 per share. The exercise price does not reset, ratchet, or otherwise adjust based on the prevailing market price of the Company’s common stock, and the warrants do not contain variable rate or floating conversion features. Other than a nominal exercise price of $0.0001 upon exercise, the full purchase price for each tranche is prepaid by the Investor at the time of funding.
If the Company, while any warrant is outstanding, (i) pays a stock dividend on the common stock, (ii) subdivides its outstanding common stock into a greater number of shares (including by forward stock split), (iii) combines its outstanding common stock into a smaller number of shares (including by reverse stock split), or (iv) issues any shares in a reclassification or recapitalization of the common stock, then the number of warrant shares issuable on exercise of each warrant and the then-applicable nominal remaining exercise price shall be proportionally adjusted.
If, at any time while any warrant is outstanding, the Company issues or is deemed to issue any shares of common stock (or any securities convertible into, exchangeable for, or exercisable into common stock) at an effective price per share of common stock less than the then-current initial effective purchase price per warrant share, (a “Dilutive Issuance”), then the exercise price shall be reduced, to equal the lower effective price per share.
During the six months ended June 30, 2026, the Company issued prepaid warrants to Pinnacle Consulting Services Inc. aggregating $943,000 in cash proceeds. The warrants are classified as equity and reported as a component of additional paid-in capital in the Company’s statement of stockholders’ deficit. See Note 7.
Securities Purchase Agreements
In May 2026, the Company entered into Securities Purchase Agreements with third party investors for the sale of equity units (“Units”). Each unit consists of one share of restricted common stock, $ par value, and one warrant to purchase one share of common stock at an exercise price of $0.50 per share. The Company sold Units at a per unit price of $0.05 for a total of $. See Note 8. Shares were issued as of June 30, 2026 for 4,000,000 Units. The remaining 500,000 units were recorded as an accrued liability in the Company’s balance sheet at June 30, 2026, totaling $25,000.
Stock Compensation Agreements
During the six months ended June 30, 2026, the Company entered into certain consulting services and independent director advisory agreements. As full and complete consideration for the consulting and advisory services to be rendered, the Company shall issue shares of the Company’s common stock having an aggregate fair market value of $240,000 each for an aggregate of $1,440,000. The number of shares to be issued shall be determined by dividing $1,440,000 by the closing price of the Company’s common stock on the first trading day following the completion of any restructuring event (“Initial Valuation Date”) as defined in the agreements, or, if no restructuring event occurs, the closing price of the Company’s common stock on the effective dates of the agreements. On the one-year anniversary of the date on which the Initial Valuation Price is determined (the “Valuation Date”), the Company shall determine the lowest closing price of the Company’s common stock during the ten (10) trading days immediately preceding the Valuation Date (the “Anniversary Price”).
If the Anniversary price is less than the Initial Valuation Price, the Company shall issue to consultant or director, such additional number of shares as are necessary so that the aggregate fair market value of all shares issued calculated using the Anniversary Price, equals the contractual compensation amount. This adjustment shall operate as a hard minimum value backstop and shall apply automatically without the need for further action by the consultant or director. Vesting of the to-be determined shares and compensation is over the twelve-month term of each of the agreements. Compensation expense totaling $537,205 has been recorded in selling, general and administrative expenses for the six months ended June 30, 2026. During the three months ended June 30, 2026, the Company recorded $178,192 of consultant and director compensation expense relating to services rendered during the three months ended March 31, 2026. The Company evaluated the effect of this amount on its previously issued condensed consolidated financial statements for the three months ended March 31, 2026 and concluded that the effect was not material. The amount has no effect on cash flows, on loss per share, or on the condensed consolidated financial statements for the six months ended June 30, 2026.
In May 2026, the Company also entered into two contingent consulting services contracts as full and complete consideration for the consulting and advisory services to be rendered, the Company shall issue shares of the Company’s common stock having an aggregate fair market value of $240,000 each for an aggregate of $480,000. The number of shares to be issued shall be determined by dividing $480,000 by the closing price of the Company’s common stock on the first trading day following the completion of any restructuring event (“Initial Valuation Date”) as defined in the agreements, or, if no restructuring event occurs, the closing price of the Company’s common stock on the effective dates of the agreements. On the one-year anniversary of the date on which the Initial Valuation Price is determined (the “Valuation Date”), the Company shall determine the lowest closing price of the Company’s common stock during the ten (10) trading days immediately preceding the Valuation Date (the “Anniversary Price”).
If the Anniversary price is less than the Initial Valuation Price, the Company shall issue to consultant or director, such additional number of shares as are necessary so that the aggregate fair market value of all shares issued calculated using the Anniversary Price, equals the contractual compensation amount. This adjustment shall operate as a hard minimum value backstop and shall apply automatically without the need for further action by the consultant or director.
Vesting on one of these contracts is contingent upon two vesting conditions as defined. The entirety of the stock-based rights shall vest when both a restructuring event has occurred and the consultant shall have (i) remained continuously engaged under this agreement through the date on which the restructuring event condition is satisfied, or (ii) completed the initial twelve (12) month term of service prior to the restructuring event. If a minimum of six months of service has been performed, and this agreement terminated prior to the restructuring event, a pro-rata amount of shares shall be considered earned by the consultant. If either condition is not satisfied, then the stock-based rights shall be forfeited in their entirety without consideration, and the Company shall have no obligation to issue any shares. Compensation expense totaling $26,658 has been recorded in selling, general and administrative expenses for the six months ended June 30, 2026. Vesting on the other contract is contingent upon two vesting conditions as defined. The entirety of the stock-based rights shall vest when both a restructuring event has occurred and the consultant shall have (i) remained continuously engaged under this agreement through the date on which the restructuring event condition is satisfied. If either condition is not satisfied, then the stock-based rights shall be forfeited in their entirety without consideration, and the Company shall have no obligation to issue any shares. No compensation expense has been recorded as of June 30, 2026.
In the event the trading price of the Company’s common stock increases following the effective date, no reduction, clawback, or forfeiture shall apply. All shares issued pursuant to the agreements shall include piggyback registration rights in the Company’s next registration statement on Form S-1 or Form 1-A, subject to customary underwriter limitations, if any.
Shares Issued in Reverse Recapitalization
In connection with the closing of the Kepler reverse recapitalization on February 27, 2026, the Company is obligated to issue additional common stock to Kepler's former shareholders pursuant to the Share Exchange Agreement. These shares will represent approximately 89.7% of the post-merger outstanding common shares, subject to a restructuring event, and constitute the consideration deemed to have been transferred to the former owners of the legal acquirer (AMFN) under ASC 805-40. See Note 9 for additional information.
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