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SHAREHOLDERS’ EQUITY
 6 Months Ended
Jun. 30, 2026
Equity [Abstract]  
SHAREHOLDERS’ EQUITY

NOTE 10 – SHAREHOLDERS’ EQUITY

 

Shares Authorized

 

The Company is authorized to issue 200,000,000 shares of common shares, par value of $0.0001 per share, and 20,000,000 shares of preferred shares, par value of $0.0001 per share.

 

At the Market Offering Agreement (“ATM Agreement”)

 

On October 23, 2023, the Company entered into an ATM Agreement with H.C. Wainwright & Co., LLC (“Wainwright”), as sales agent, pursuant to which the Company may offer and sell, from time to time, through Wainwright, shares of the Company’s common shares, par value of $0.0001 per share, having an aggregate offering price of up to approximately $2 million (“ATM Shares”). The Company pays commission fees of 4% for each completed sale of ATM Shares pursuant to the terms of the ATM Agreement. For the six months ended June 30, 2026 and 2025, the Company sold a total of nil and 794 shares of the ATM Shares for net proceeds of nil and $30,445 after deducting commission fees and other transaction costs, respectively. The subscription receivable of $103,942 related to ATM Shares sold on December 31, 2024 was collected in full on January 2, 2025.

 

 

Designation of Series A Convertible Preferred Shares and Securities Purchase Agreement

 

On June 30, 2025, the Company filed a certificate of designations of preferences and rights of Series A convertible preferred shares (“Series A COD”) with the Secretary of State of the State of Delaware to set forth the terms of the Series A convertible preferred shares. Pursuant to the Series A COD, the Company designated 2,000 shares of preferred shares as Series A convertible preferred shares and each share of Series A convertible preferred shares has a stated value of $1,100. On October 22, 2025, the Board of Directors of the Company approved to amend the number of designated shares of Series A convertible preferred shares to 4,000 shares pursuant to the Series A COD. The following summarizes the material terms of the Series A convertible preferred shares:

 

  ● Dividends – Each Series A convertible preferred shares holder (“Holder”) shall be entitled to receive dividends of 10% per annum on the stated value of each share of Series A convertible preferred shares.

 

  ● Liquidation – In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company, the Holders shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of common shares and any other class or series of equity shares of the Company, an amount per share equal to the greater of (i) the stated value plus all accrued and unpaid dividends thereon or (ii) the amount that such Holder would receive if such Holder converts all of its shares of Series A convertible preferred shares into common shares immediately prior to such liquidation, dissolution or winding up. If, upon any such liquidation, dissolution or winding up, the assets and funds available for distribution among the Holders shall be insufficient to permit the payment to such Holders of the full preferential amount aforesaid, then the entire assets and funds of the Company legally available for distribution shall be distributed ratably among the Holders in proportion to the amount that each such Holder is entitled to receive. After the payment of the full amount of the liquidation preference to which the Holders are entitled, the Holders shall have no right or claim to any of the remaining assets of the Company.

 

  ● Voting – The Series A convertible preferred shares shall have no voting rights. However, as long as any shares of Series A convertible preferred shares are outstanding, the Company shall not, without the affirmative vote of the Holders of a majority of the outstanding shares of Series A convertible preferred shares, and with each share of Series A convertible preferred shares having one vote on (i) alter or change adversely the powers, preferences or rights given to the Series A convertible preferred shares or alter or amend the Series A COD, (ii) issue additional shares of Series A convertible preferred shares or increase or decrease (other than by conversion) the number of authorized shares of Series A convertible preferred shares, or (iii) enter into any agreement with respect to any of the foregoing.

 

  ● Conversion – Each Holder shall have the right, at such Holder’s opinion, to convert any or all of the Series A convertible preferred shares held by such Holder into fully paid and nonassessable shares of common shares. The number of shares of common shares issuable upon conversion of each share of Series A convertible preferred shares shall be equal to the quotient obtained by dividing (i) the stated value plus all accrued and unpaid dividends thereon by (ii) 90% of the average of the two lowest volume weighted average price (“VWAP”) of the Company’s common shares for the five trading days immediately preceding the respective common shares conversion notice delivery date.

 

  ● Redemption – No share of Series A convertible preferred shares shall be redeemable under any circumstances.

 

On June 30, 2025, the Company entered into a securities purchase agreement and a registration rights agreement with Crom Structured Opportunities Fund I, LP (“Crom Structured”), pursuant to which the Company closed, issued and sold to Crom Structured an aggregate of 2,000 shares of the Company’s designated Series A convertible preferred shares for an aggregate purchase price of $2,000,000. Concurrently with the signing of the securities purchase agreement, the Company issued 37,500 shares of common shares (“37,500 Common Shares”) to Crom Structured for no consideration. The Company received net proceeds of $1,800,000 from the securities purchase agreement after deducting share issuance transaction fees. The net proceeds from the securities purchase agreement were allocated to Series A convertible preferred shares and 37,500 Common Shares based on their relative fair values.

 

 

For the three and six months ended June 30, 2026, there were 400 and 400 shares of Series A convertible preferred shares converted into 152,753 and 152,753 shares of common shares, respectively. For the three and six months ended June 30, 2025, no shares of Series A convertible preferred shares were converted into common shares.

 

For the three and six months ended June 30, 2026, dividends accrued on Series A convertible preferred shares amounted to $19,356 and $47,324, respectively. For the three and six months ended June 30, 2025, dividends accrued on Series A convertible preferred shares amounted to $611 and $611, respectively.

 

Equity Purchase Agreement

 

On June 30, 2025, the Company entered into an equity purchase agreement and a registration rights agreement with Crom Structured, pursuant to which Crom Structured has committed to purchase up to $25 million in shares of the Company’s common shares, subject to certain limitations and conditions set forth in the equity purchase agreement. The Company shall not issue or sell any shares of common shares under the equity purchase agreement which, when aggregate with all purchases of common shares made by Crom Structured pursuant to the equity purchase agreement, would result in beneficial ownership of more than 4.99% of the Company’s outstanding shares of common shares.

 

Pursuant to the terms of the equity purchase agreement, the Company has the right, but not the obligation, to sell to Crom Structured, shares of common shares over the period commencing on the date of the equity purchase agreement and ending on the earlier of (i) the date on which Crom Structured shall have purchased common shares pursuant to the equity purchase agreement equal to $25 million, (ii) June 30, 2027, (iii) written notice of termination by the Company to Crom Structured, (iv) the registration statement is no longer effective after the initial effective date of the registration statement, or (v) the date that the Company commences a voluntary bankruptcy case, a bankruptcy proceeding is commenced against the Company, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors. The purchase price will be calculated as 96% of the VWAP of the Company’s common shares on the trading day immediately preceding the respective common shares purchase notice delivery date.

 

Concurrently with the signing of the equity purchase agreement, the Company issued 24,272 shares of common shares to Crom Structured as a commitment fee. The total fair value of the common shares issued for the commitment fee of $250,000 was recorded as deferred offering costs in the consolidated balance sheets.

 

For the three and six months ended June 30, 2026 and 2025, no common shares were sold pursuant to the terms of the equity purchase agreement.

 

Share Repurchase Program for Common Shares

 

On February 18, 2026, the Board of Directors of the Company approved a share repurchase program (“2026 Share Repurchase Program”), pursuant to which the Company is authorized to repurchase up to $2 million of its outstanding common shares. The timing and amount of repurchases under the program are determined by the Company’s management based on its evaluation of market conditions and other factors. This program has not set termination date and may be suspended or discontinued by at any time.

 

For the three and six months ended June 30, 2026, no common shares were repurchased pursuant to the 2026 Share Repurchase Program.

 

Reverse Stock Split for Common Shares

 

On March 4, 2026, the Board of Directors of the Company approved a reverse stock split (“2026 Reverse Stock Split”) of the Company’s issued and outstanding common shares at a 1-for-20 ratio. The 2026 Reverse Stock Split was effective on April 2, 2026. The Company’s authorized number of shares and par value per share of common shares were not affected by the 2026 Reverse Stock Split. References made to share and per share information of common shares disclosed for all periods presented have been retroactively adjusted to reflect the effect of the 2026 Reverse Stock Split.

 

 

Shares Issued and Outstanding

 

As of June 30, 2026 and December 31, 2025, there were 1,441,565 and 1,270,991 shares of common shares issued and outstanding, respectively.

 

As of June 30, 2026 and December 31, 2025, there were 617 and 1,017 shares of preferred shares (designated as Series A convertible preferred shares) issued and outstanding, respectively.