Note 7. Equity

The Company is currently authorized to issue up to 500,000,000 shares of common stock with a par value of $0.001. In addition, The Company is authorized to issue 50,000,000 shares of preferred stock with a par value of $0.001. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.

Common Stock

As of June 30, 2026 and December 31, 2025, there were 38,890,943 and 38,890,943 shares issued and outstanding, respectively.

Preferred Stock

Series A Convertible Preferred Stock

Our board of directors designated 2,068 shares of our preferred stock as Series A Convertible Preferred Stock (“Series A”) with a par value of $0.001. Series A has liquidation and dividend preferences. Each share of Series A has voting rights equal to the amount of shares of common stock into which the Series A is convertible. Each share of Series A is convertible on a 1 to 1.25 common share basis. As of each of June 30, 2026 and December 31, 2025, there were 2,068 shares of Series A issued and outstanding.

Series B-1 Convertible Preferred Stock

Our board of directors designated 8,619,420 shares of our preferred stock as Series B-1 Convertible Preferred Stock (“Series B-1”) with a par value of $0.001. Series B-1 has liquidation and dividend preferences. Each share of Series B-1 has voting rights 3.2x (times) that of the number of votes that is equal to the number of common stock into which the Series B-1 are convertible. Each share of Series B-1 is convertible on a 1 to 11 common share basis. On September 30, 2023, the Articles of Incorporation of the Company were amended to remove the redemption right of the Series B-1. The Company’s Articles of Incorporation require 51% of the outstanding votes of the Series B-1 to amend or repeal any incorporation documents that would alter the rights or preferences of Series B-1, alter the authorized number of shares of the series, create or issue any classes of preferred stock senior to the Series B-1, amend the company’s bylaws, or enter into a transaction that would result in a change in control. As of June 30, 2026 and December 31, 2025, there are 5,252,753 and 8,619,420 shares of Series B-1 issued and outstanding, respectively.

Effective October 31, 2025, Rowland W. Day II resigned from his positions as President, Chief Financial Officer, Secretary, Chief Legal Officer, and as a member of the Board of Directors of the Company. In connection with his resignation, the Company agreed to enter into a Stock Repurchase Agreement providing for repurchase by the Company from the Trust of up to 4,309,710 shares of the Company’s Series B-1 Preferred Stock and 307,647 shares of common stock, at per-share prices ranging from $0.605-$0.66 for the preferred shares and $0.055-$0.06 for the common shares, depending on the repurchase date.

On March 26, 2026, the Company entered into an amendment to the Stock Repurchase Agreement pursuant to which the Expiration Date was extended to April 10, 2026. As part of the extension of the settlement date, the Company paid an additional $100,000 to Rowland as an extension fee.

On April 10, 2026, the Company purchased 4,166,667 shares of the Company’s Series B-1 Preferred Stock held by Rowland at a price of $0.66 per Series B-1 Preferred share for a total cash consideration of $2,850,000. During the period ended June 30, 2026, the Company paid $2,150,000 in cash consideration to Rowland for the share re-purchase and the $100,000 extension fee and $700,000 was wired directly by the noteholder to Rowland.

On March 9, 2026, the board of directors approved the issuance of 800,000 share of Series B-1 Convertible Preferred Stock to Mr. Leal as a bonus. The 800,000 shares of Series B-1 convertible preferred stock valued at the at-converted value of $0.13 per share with a fair value of $1,129,920.

During the three months ended June 30, 2026, the Company engaged an independent valuation specialist to determine the fair value of the Series B-1 Preferred Stock. The valuation utilized an Option Pricing Model (OPM)], incorporating significant unobservable inputs including a discount for lack of marketability of 3.58%, an expected volatility of 212.5%, and an expected time to liquidity event of 3.00 years. Based on this assessment, the estimated fair value of the Series B-1 Preferred Stock was determined to be $1,172,960 or $1.4662 per share.

Series B-2 Convertible Preferred Stock

Our board of directors designated 3,107,438 shares of our preferred stock as Series B-2 Convertible Preferred Stock (“Series B-2”) with a par value of $0.001. On May 1, 2023, the Articles of Incorporation of the Company were amended such that no Series B-2 shares are authorized. Series B-2 have no liquidation or dividend preferences. Each share of Series B-2 has voting rights equal to the amount of shares of common stock the Series B-2 is convertible to and is convertible on a 1 to 1 common share basis and shall automatically be converted into common shares up the Public Offering Closing. As of June 30, 2026 and December 31, 2025, there are no shares of Series B-2 issued and outstanding.

Common Stock Liability

Common stock to be issued for cash

During the period ended June 30, 2026, the Company granted the issuance of 5,222,224 shares of common stock for $740,000 cash. As of June 30, 2026, the common shares were not issued to the equity holders and as such, the common shares were recorded as common stock liability on the statement of stockholder’s equity. In connection with two stock purchase agreements, the Company issued two warrants to purchase 3,127,778 shares of the Company’s common stock. The warrants had a relative fair value of $158,287, which was recorded as a discount on the note.

During the period ended June 30, 2026, total amount of shares payable and total value recorded as common stock liability issued for cash was 5,222,224 and $740,000, respectively.

Common stock to be issued for interest

During the period ended June 30, 2026, the Company granted the issuance of 766,000 shares of common stock in lieu of interest on convertible and promissory notes with a fair value of $116,364. As of June 30, 2026, the common shares were not issued to the equity holders and as such, the common shares were recorded as common stock liability on the statement of stockholder’s equity.

During the period ended June 30, 2026, total amount of shares payable and total value recorded as common stock liability issued for interest on notes was 766,000 and $116,364, respectively.

Common stock to be issued for accounts payable settlement

During the period ended June 30, 2026, the Company granted the issuance of 100,000 shares of common stock to settle an accounts payable balance with a fair value of $16,000. As of June 30, 2026, the common shares were not issued to the equity holders and as such, the common shares were recorded as common stock liability on the statement of stockholder’s equity.

During the period ended June 30, 2026, total amount of shares payable and total value recorded as common stock liability issued for accounts payable settlement was 100,000 and $16,000, respectively.

Common stock to be issued for service

During the period ended June 30, 2026, the Company entered into several consultant agreements where the Company granted the issuance of 1,613,416 common shares to the consultants. The shares had a fair value of $301,711.

On January 1, 2026, the Company entered into a consultant agreement where the consultant will receive 10,000 common shares on a monthly basis beginning on the effective date of the agreement. During the period ended June 30, 2026, the Company granted the issuance of 60,000 common shares to the consultant. The shares had a fair value of $11,406.

On December 18, 2025, the Company entered into a six month term consultant agreement where the consultant will receive 7,000 common shares on a monthly basis beginning on the effective date of the agreement. During the period ended June 30, 2026, the Company granted the issuance of 42,000 common shares to the consultant. The shares had a fair value of $7,482.

On August 1, 2025, the Company entered into a consultant agreement where the consultant will receive 7,000 common shares on a monthly basis beginning on the effective date of the agreement. On December 15,2025, the Company entered into an amendment to the consultant agreement to increase the number of monthly common shares to 14,000 common shares per month beginning on January 1, 2026. In 2025, the Company granted the issuance of 35,000 common shares to the consultant. During the period ended June 30, 2026, the Company granted the issuance of 84,000 common shares to the consultant, having a fair value of $15,973.

On August 1, 2025, the Company entered into a consultant agreement where the consultant will receive 7,000 common shares on a monthly basis beginning on the effective date of the agreement. In 2025, the Company granted the issuance of 35,000 common shares to the consultant. During the period ended June 30, 2026, the Company granted the issuance of 42,000 common shares to the consultant, having a fair value of $7,986.

As of June 30, 2026, the common shares were not issued to the equity holders and as such, the common shares were recorded as common stock liability on the statement of stockholder’s equity. During the period ended June 30, 2026, total amount of shares payable and total value recorded as common stock liability issued for service was 1,841,416 and $344,558, respectively. As of June 30, 2026, the total amount of shares payable issued for service was 4,039,416.

Restricted Common Stock

2026 Issuance

On June 1, 2026, the Company granted the issuance of 300,000 restricted common shares to an advisor. The restricted common shares vest in six-month equal installments. The restricted common shares had a fair value of $53,100 or $0.18 per share.

On March 30, 2026, the Company granted the issuance of 323,334 restricted common shares to an advisor. 83,334 restricted common shares vest immediately and the remaining balance vests in twelve months equal instalments. The restricted common shares had a fair value of $43,973 or $0.14 per share.

On March 1, 2026, the Company granted the issuance of 180,000 restricted common shares to an advisor. The restricted common shares vest in six-month equal installments. The restricted common shares had a fair value of $24,066 or $0.11 per share.

2025 Issuance – Recorded in 2026

On December 1, 2025, the Company granted the issuance of 24,000 restricted common shares to an advisor. The restricted common shares vest in six-month equal installments. The restricted common shares had a fair value of $5,712 or $0.24 per share.

The following table summarizes the restricted common stock activity for the six months ended June 30, 2026:

 Schedule of Restricted Common Stock Activity

During the three months ended June 30, 2026, the Company recognized $48,368 of stock-based compensation expense related to outstanding restricted common stock. During the six months ended June 30, 2026, the Company recognized $72,370 of stock-based compensation expense related to outstanding restricted common stock. At June 30, 2026, the Company had $84,822 of unrecognized compensation expense related to outstanding restricted common stock, which will be recognized over approximately 1.00 year.

Stock Warrants

During the period ended June 30, 2026, the Company issued 3,300,000 and 2,533,928 common stock warrants with exercise price of $0.08 and $0.14, respectively, in conjunction with convertible secured promissory notes agreements. The warrants had a relative fair value of $419,525, which was recorded as a discount on the note payable.

During the period ended June 30, 2026, the Company issued 3,127,778 common stock warrants with exercise price of $0.18 in conjunction with stock purchase agreements.

During the period ended June 30, 2026, the Company defaulted on the May 13, 2026 notes and issued a warrant to purchase 3,718,750 shares of the Company’s common stock an exercise price of $0.14. The warrants had a fair value of $817,603, which was recorded as an interest expense and additional paid-in-capital.

In connection with the April 8, 2026 Reseller Agreement, In connection with the Reseller Agreement, the Company granted the issuance of a 10ten-year warrant to purchase 22,222,222 shares of common stock with exercise price of $0.135. The warrant had a fair value of $2,588,313, which was recorded as a discount against the $3,000,000 pre-payment received from the customer. The customer warrant was calculated using the Black-Scholes method over the expected terms and the following assumptions: volatility of 176.81%, exercise price of $0.135 and risk-free rate of 4.29%. 

The relative fair value of the warrants was estimated using a Black-Scholes model with the following assumptions:

Schedule of Fair Value of Warrants Estimated Using Black-Scholes Model 

The following table summarizes the stock warrant activity for the six months ended June 30, 2026:

Schedule of Warrant Outstanding 

As of June 30, 2026 the outstanding and exercisable warrants have a weighted average remaining term of 7.12 with an intrinsic value of $789,991.

Stock Options

On February 23, 2026, the Company issued 450,000 options to employees. The options issued have a 1one-year term at an exercise price of $0.18. The options issued to the employees vest immediately on the date of issuance. The total fair value of these option grants at issuance was $15,988. The Company valued the stock options using the Black-Scholes model with the following key assumptions:

Schedule of Stock Options Assumptions

During the three months ended June 30, 2026, the Company recognized $90,566 of expense related to outstanding stock options. During the six months ended June 30, 2026, the Company recognized $197,121 of expense related to outstanding stock options.

The following table summarizes the stock option activity for the six months ended June 30, 2026:

Schedule of Stock Options 

As of June 30, 2026, the outstanding and exercisable options have a weighted average remaining term of 3.73 with an intrinsic value of $0.