STOCKHOLDERS’ EQUITY |
6 Months Ended |
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Jun. 30, 2026 | |
| Equity [Abstract] | |
| STOCKHOLDERS’ EQUITY | NOTE 6 – STOCKHOLDERS’ EQUITY
Series A Convertible Preferred Stock
On April 22, 2025, in connection with the execution of certain exchange agreements, the Company designated shares of authorized and unissued preferred stock as Series A Convertible Preferred Stock. Upon completion of the Redomestication, these shares were converted into Series A Convertible Preferred Stock of the redomesticated entity on substantially the same terms (“Series A Preferred”).
Each share of Series A Preferred has an initial stated value of $ per share, subject to adjustment pursuant to the Company’s Articles of Incorporation for stock splits, stock dividends, recapitalizations, reorganizations, reclassifications, combinations, subdivisions and similar events. The Series A Preferred ranks senior to the Company’s Class A common stock with respect to dividends, distributions, and upon liquidation, dissolution, and winding up.
The Series A Preferred accrues cash dividends at a rate of 10% per annum. Dividends may be paid in cash, shares of the Company’s Class A common stock at a rate of 15% per annum, through increases to the stated value of the Series A Preferred (“Capitalized Dividends”), or in a combination thereof, subject to the terms of the Articles of Incorporation. The conversion amount of the Series A Preferred may also include certain additional amounts, make-whole amounts and other amounts payable pursuant to the Articles of Incorporation. The increase in the gross stated value of the Series A Preferred primarily relates to capitalized dividends and other adjustments pursuant to the Articles of Incorporation.
The conversion price of the Series A Preferred is subject to periodic reset provisions based on the market price of the Company’s Class A common stock. The Series A Preferred also contains anti-dilution and stock combination event adjustment provisions, including adjustments based on an “Event Market Price,” as defined in the Articles of Incorporation, which may affect the conversion price and the number of shares issuable upon conversion. In connection with the Company’s 2026 reverse stock split, the conversion price was proportionately adjusted to $21.60 per share. On April 22, 2026, the conversion price was adjusted to $2.76 per share pursuant to the reset provisions.
Upon the voluntary conversion by the holders of the Series A Preferred, in addition to the issuance of Class A common stock issuable upon conversion of the stated value of the Series A Preferred, the Company shall issue to the holders of Class A common stock all dividends that would otherwise have accrued on such Series A Preferred if such share were held until the five-year anniversary of issuance (the “Make-Whole Amount”). The Make-Whole Amount is convertible into Class A common stock at the “Alternate Conversion Price” which is equal to the lesser of (i) the conversion price, and (ii) 90% of the lowest volume weighted average price (“VWAP”) of the Class A common stock during the five consecutive trading days immediately prior to such conversion (subject to the Floor Price of $ (the “Floor Price”)) (the “Alternate Conversion Price”). If at the time of a conversion the Alternate Conversion Price is determined to be the Floor Price because such Floor Price is greater than 90% of the then five-day VWAP of a share of Class A common stock, then the Conversion Amount, is automatically increased pro rata, by the applicable Alternate Conversion Floor Amount. The “Conversion Amount” means, on any date, the sum of (1) the stated value plus (2) any declared and unpaid dividends on the Series A Preferred plus (3) the Make-Whole Amount, if any, plus (4) any other amounts owed to such holder. The “Alternate Conversion Floor Amount” means an amount equal to the product obtained by multiplying (A) the higher of (I) the highest price that the Class A common stock trades at on the trading day immediately preceding the relevant date and (II) the applicable Alternate Conversion Price and (B) the difference obtained by subtracting (I) the number of shares of Class A common stock delivered to such holder from (II) the quotient obtained by dividing (x) the applicable Conversion Amount, by (y) the applicable Alternate Conversion Price without giving effect to the Floor Price.
Conversion of Series A Preferred Stock
During the three months ended June 30, 2026, the Company issued an aggregate of shares of Class A common stock upon conversion of shares of Series A Preferred. During the six months ended June 30, 2026, the Company issued an aggregate of shares of Class A common stock upon conversion of shares of Series A preferred. The shares issued had fair values ranging from $ to $ per share.
During the six months ended June 30, 2026, the Company issued an aggregate of shares of Class A common stock to holders of Series A Preferred in satisfaction of accrued dividends in lieu of cash. No such shares were issued during the three months ended June 30, 2026.
The Company also reversed the conversion of shares of Series A Preferred that had previously been reflected as converted as of December 31, 2025. The related issuance of shares of Class A common stock was subsequently cancelled because the shares were not issued or delivered to the holders. Accordingly, the Company reinstated the related preferred stock balances and reversed the previously recorded conversion entries, resulting primarily in reductions to Class A common stock and additional paid-in capital, with a corresponding adjustment to accumulated deficit related to amounts previously recognized under the make-whole provisions.
The Company evaluated the impact of the cancelled conversions on its previously issued financial statements, including earnings per share, and concluded that the effect was not material.
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