Stockholders' Equity |
6 Months Ended | |||||||||||||||||||||||||||||||
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Jun. 30, 2026 | ||||||||||||||||||||||||||||||||
| Stockholders’ Equity [Abstract] | ||||||||||||||||||||||||||||||||
| STOCKHOLDERS' EQUITY | NOTE 6 – STOCKHOLDERS’ EQUITY
Authorized Stock
The Company’s authorized capital stock consists of common stock and preferred stock, each having a par value of $0.0001 per share.
The holders of the Company’s Common Stock are entitled to one vote for each share held. The holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of legally available funds. The Company has not declared or paid any dividends on its common stock, and it currently intends to retain any future earnings to fund the operation and expansion of its business. Upon liquidation, dissolution or winding-up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining after payment of all liabilities and any preferential amounts payable to holders of any outstanding preferred stock. The holders of Common Stock have no preemptive, subscription, redemption, or conversion rights.
Common Stock
During the six months ended June 30, 2026, the Company completed its financing through the issuance of Series C Convertible Preferred Stock, effected a reverse stock split, and completed the direct listing of its common stock on the Nasdaq Capital Market, resulting in significant changes to the Company’s capital structure.
On September 29, 2025, the Company effected a one-for-5.92 (1:5.92) reverse stock split of its common stock (the “2025 Reverse Split”). The 2025 Reverse Split was approved by the Board of Directors on August 18, 2025 and by the Company’s stockholders by written consent in September 2025. The 2025 Reverse Split was implemented in connection with the Company’s planned listing on the Nasdaq Capital Market and did not affect the number of authorized shares of common stock.
On June 19, 2026, the Company effected a one-for-ten (1:10) reverse stock split of its common stock (the “2026 Reverse Split”). The 2026 Reverse Split was approved by the Board of Directors on June 1, 2026 and became effective upon the filing of Articles of Amendment to the Company’s Articles of Incorporation with the Nevada Secretary of State. The amendment effected both the one-for-ten reverse split of the Company’s common stock and a proportional reduction in the number of authorized shares of common stock. The number of authorized shares of preferred stock was not affected.
The 2026 Reverse Split was implemented in accordance with the requirements of the Securities Purchase Agreement governing the Company’s Series C Convertible Preferred Stock.
Each reverse stock split affected the Company’s issued and outstanding shares of common stock, treasury shares, stock options, warrants and all other securities exercisable for or convertible into common stock on a proportionate basis. No fractional shares were issued in connection with either reverse stock split. Fractional interests resulting from either reverse stock split were rounded up to the nearest whole share.
All share and per-share amounts presented in these condensed consolidated financial statements and the accompanying notes have been retroactively adjusted to give effect to both the 2025 Reverse Split and the 2026 Reverse Split for all periods presented. The par value of the Company’s common stock and preferred stock was not affected by either reverse stock split.
During the three months ended June 30, 2026, the Company issued 658 shares of Common Stock to its SEC counsel in consideration for legal services provided in connection with the Company's securities filings and Nasdaq listing. The shares were valued at approximately $75,000 and the amount was recorded as professional fees.
Reserved Shares
As of June 30, 2026, the Company has reserved the following shares of common stock for future issuance:
Preferred Stock
The Company is authorized to issue a total of 60,500,000 shares of preferred stock, par value $0.0001 per share, of which 8,000,000 shares have been designated as Series A convertible preferred stock (“Series A Preferred”), and 52,500,000 shares have been designated as Series B convertible preferred stock (“Series B Preferred”).
Series A and Series B Convertible Preferred Stock
Immediately prior to the Company’s direct listing on the Nasdaq Capital Market on April 23, 2026, all outstanding shares of Series A Preferred and Series B Preferred automatically converted into shares of the Company’s common stock in accordance with their respective Certificates of Designation.
Following the 2026 Reverse Split, the Series A Preferred converted into 111,358 shares of common stock and the Series B Preferred, including the accumulated and unpaid dividends through the conversion date, converted into 572,651 shares of common stock.
Following the automatic conversions, no shares of Series A Preferred or Series B Preferred remained issued or outstanding, and all associated conversion rights, dividend rights and liquidation preferences terminated.
Series C Convertible Preferred Stock
On April 21, 2026, the Company completed the issuance of 937,500 shares of Series C Preferred pursuant to the Securities Purchase Agreement dated January 31, 2026.
The Series C Preferred has an aggregate stated value of $9.375 million and was issued at a 20% original issue discount for gross proceeds of $7.5 million. After deducting placement agent commissions and other offering costs, the Company received net proceeds of approximately $6.8 million.
Each share of Series C Preferred has a stated value of $10.00 and is convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price equal to the lesser of:
The conversion price is subject to customary adjustments for stock splits, stock dividends, recapitalizations and similar transactions, including the 2026 Reverse Split, as well as certain anti-dilution adjustments provided in the Certificate of Designation.
Conversion is subject to a 4.99% beneficial ownership limitation unless waived in accordance with the Certificate of Designation.
Holders of the Series C Preferred are entitled to cumulative dividends at the rate of 12% per annum based on the stated value. Dividends are payable monthly, in cash or in kind, if declared by the Board of Directors, beginning six months after the commencement of trading of the Company’s common stock on the Nasdaq Capital Market, and accrue only while the Series C Preferred remains outstanding.
Upon any liquidation, dissolution or winding up of the Company, or upon the occurrence of a Deemed Liquidation Event (as defined in the Certificate of Designation), holders of the Series C Preferred are entitled to receive, prior to any distribution to holders of common stock, the greater of (i) the stated value of the Series C Preferred or (ii) the amount that would have been payable had the Series C Preferred been converted into common stock immediately prior to such event.
The Company evaluated the accounting treatment of the Series C Preferred pursuant to ASC 480, Distinguishing Liabilities from Equity, ASC 480-10-S99 and ASC 815, Derivatives and Hedging. The Company concluded that the Series C Preferred is appropriately classified as permanent equity because it is not mandatorily redeemable and any deemed liquidation events are within the Company’s control. The Company further concluded that none of the embedded features require bifurcation as derivative instruments under ASC 815. Accordingly, the Series C Preferred is classified within stockholders’ equity, net of issuance costs.
In connection with the financing, the Company entered into a Registration Rights Agreement pursuant to which it agreed to file a registration statement covering the resale of the shares of common stock issuable upon conversion of the Series C Preferred. During the quarter ended June 30, 2026, the Company filed the required registration statement with the Securities and Exchange Commission. |