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

Note 7 – Stockholders’ Equity (Deficit)

 

The Company has two classes of capital stock: preferred stock and common stock.

 

Authorized Capital Structure

 

The Company is authorized to issue 110,000,000 shares of capital stock, consisting of 100,000,000 shares of common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share.

 

On October 27, 2025, the Company filed two Certificates of Amendment with the Texas Secretary of State, each effective as of that date:

 

●The first amendment reduced the authorized common stock from 6,000,000,000 shares to 100,000,000 shares, reduced the authorized preferred stock from 20,000,000 shares to 10,000,000 shares, and reduced the par value of the preferred stock from $1.00 per share to $0.0001 per share. The par value of the common stock was unchanged.
●The second amendment was a conforming amendment that restated the conversion provisions of the Series A Preferred Stock, including the anti-dilution adjustment formula, to align the Certificate of Formation with the conversion terms in effect since the original designation. The amendment did not modify the economic rights or preferences of the Series A Preferred Stock.

 

The board of directors is authorized, without further stockholder approval, to designate one or more series of preferred stock from time to time and to fix the rights, preferences, limitations, and restrictions of each series prior to issuance, including dividend rights, voting rights, redemption terms, conversion and exchange rights, liquidation preferences, and ranking among different series of preferred stock.

 

Preferred Stock - Series Designations

 

Effective March 18, 2026, the Company filed a Certificate of Amendment with the Texas Secretary of State undesignating all previously designated series of preferred stock. The following series were undesignated, and the underlying shares were returned to the authorized but unissued preferred stock pool:

 

●Series A: 5,450,000 shares

●Series B: 9,000,000 shares

●Series C: 840,000 shares

●Series D: 1,560,000 shares

●Series E: 1,200,000 shares

●Series F: 600,000 shares

●Series G: 3,000,000 shares

●Series H: 15,000,000 shares

●Series S: 100,000 shares

 

In the aggregate, 36,750,000 shares previously designated across these nine series were returned to the authorized but unissued preferred stock pool. As a result of the undesignation, no series of preferred stock are currently designated, and no shares of preferred stock were issued or outstanding at June 30, 2026. The board of directors retains the authority to designate new series of preferred stock from the authorized 10,000,000 share pool at a future date without further stockholder approval.

 

Series A Preferred Stock

 

Prior to its undesignation, the Company had designated 5,450,000 shares of Series A 8% Cumulative Convertible Redeemable Preferred Stock at $0.0001 par value per share. The material terms of the Series A Preferred Stock were as follows:

 

●Dividends. Holders were entitled to cumulative dividends at a rate of 8% per annum ($0.1064 per share per year), payable semi-annually on January 1 and July 1 of each year. Dividends were payable in cash or, at the Company’s election, in additional shares of Series A Preferred Stock valued at $1.33 per share.

●Liquidation Preference. Upon any liquidation, dissolution, or winding up of the Company, holders were entitled to receive $1.33 per share plus all accumulated and unpaid dividends, prior to any distribution to holders of any other series of preferred stock or common stock.

 

●Conversion. Each share of Series A Preferred Stock was convertible, at the option of either the Company or the holder, into common stock at a ratio of 1 share of common stock for every 400 shares of Series A Preferred Stock. The conversion ratio was subject to adjustment for stock splits, stock dividends, combinations, reclassifications, and below-market issuances pursuant to a broad-based weighted average anti-dilution formula.

●Redemption. The Company had the right to redeem the Series A Preferred Stock, in whole or in part, at any time after the second anniversary of the Final Closing Date (as defined in the Certificate of Formation) at a redemption price of $1.46 per share plus all accumulated and unpaid dividends, provided that the common stock had closed at or above $2.00 per share for 20 consecutive trading days prior to the redemption notice. The Company was required to provide 30 days’ prior written notice of any redemption.

●Voting Rights. Holders voted together with holders of common stock as a single class on all matters submitted to a vote of stockholders, with each holder entitled to cast one vote for each share of common stock into which such holder’s Series A Preferred Stock was then convertible.

 

Series B Preferred Stock

 

Prior to its undesignation, the Company had designated 9,000,000 shares of Series B Convertible Preferred Stock at $0.0001 par value per share. The material terms of the Series B Preferred Stock were as follows:

 

●Conversion. Series B Preferred Stock was convertible into common stock at a contractual ratio of 0.25 shares of common stock per share of Series B Preferred Stock surrendered, subject to adjustment for stock splits and combinations. The Certificate of Designation provided for a 125% conversion factor, resulting in an effective conversion ratio of 0.3125 shares of common stock per share of Series B Preferred Stock.

●Voting Rights. Holders were entitled to 100 votes per share on all matters submitted to a vote of stockholders, voting together with holders of common stock as a single class.

 

Conversion of Preferred Stock

 

On October 30, 2025, all 435,085 shares of Series A Preferred Stock and all 192,000 shares of Series B Preferred Stock then issued and outstanding were converted into cSommon stock as follows:

 

●The 435,085 shares of Series A Preferred Stock were converted into 1,101 shares of common stock at the contractual ratio of 1 share of common stock for every 400 shares of Series A Preferred Stock.

●The 192,000 shares of Series B Preferred Stock were converted into 60,009 shares of common stock at the contractual effective ratio of 0.3125 shares of common stock per share of Series B Preferred Stock.

 

Fractional shares resulting from each conversion were rounded up to the nearest whole share. Both conversions were accounted for as reclassifications within stockholders’ equity, with the carrying amount of the converted preferred stock reclassified to common stock and additional paid-in capital. No gain or loss was recognized.

 

Following the October 30, 2025 conversions, no shares of preferred stock of any series remained issued and outstanding at December 31, 2025 or June 30, 2026.

 

Common Stock

 

-100,000,000 shares authorized

-$0.0001 par value

-Voting at 1 vote per share

 

Equity Transactions for the Six Months Ended June 30, 2026

 

Stock Issued for Services

 

The Company issued 50,000 shares of common stock to a consultant for services rendered, having a fair value of $94,500 ($1.89/share), based upon the quoted closing trading price on the grant date.

 

Cancellation of Shares

 

The Company cancelled 3,125 shares of common stock related to a prior period conversion of Series A Convertible Preferred Stock to common stock.

 

Equity Transactions for the Year Ended December 31, 2025

 

Stock Issued for Cash

 

The Company issued 9,333,333 shares of common stock for $10,000,000 ($1.00 - $1.50/share). Of the total shares issued, 8,000,000 were sold to a related party, who is a principal stockholder for $8,000,000.

 

Common Stock Repurchase Agreement

 

The Company repurchased 4,000,000 shares of common stock from a stockholder for $2,500,000 ($0.60 - 0.75/share).

 

The repurchased shares were cancelled and retired upon acquisition and are no longer considered issued or outstanding. In accordance with FASB ASC 505-30, “Equity – Treasury Stock”, and consistent with the Company’s corporate charter and applicable state law, the cancelled shares were returned to the status of authorized but unissued, thereby increasing the number of shares available for future issuance.

 

The repurchase will be accounted for as a reduction to stockholders’ equity, with the purchase price allocated entirely to Additional Paid-in Capital (“APIC”), as the Company had sufficient APIC available from prior issuances. No gain or loss will be recognized in connection with this transaction. The cash outflow related to the stock repurchase will be classified as a financing activity in the statement of cash flow.

 

In conjunction with the stock repurchase, the Company also issued 500,000 freestanding warrants to the selling stockholder. The warrants have an exercise price of $1 and expire on December 31, 2026. The warrants were classified as equity instruments and recorded at fair value, with a corresponding credit to APIC. As the warrants were issued as part of the consideration for the share repurchase, their fair value was included in the total cost of the repurchase transaction, resulting in a net effect of $0 on total stockholders’ equity.

 

See Note 9 for warrants.

 

Stock Issued for Services

 

The Company issued 100,000 shares of common stock to a consultant for services rendered, having a fair value of $177,000 ($1.77/share), based upon the quoted closing trading price on the grant date.