NOTE 7: STOCKHOLDERS’ DEFICIT

Common Stock

The Company has authorized 3,000,000,000 shares of common stock, $0.0001 par value per share. As of June 30, 2026 and 2025, 1,149,509,667 and 368,544,861 shares of common stock were issued and outstanding, respectively.

Issuances of Common Stock – Year Ended June 30, 2026

During the year ended June 30, 2026, the Company issued common stock as follows:

Issuances of Common Stock – Year Ended June 30, 2025

During the year ended June 30, 2025, the Company issued common stock as follows:

Common Stock Warrants

In September 2022, in connection with amendments to financing arrangements originally dated February 1, 2022 and February 23, 2022, the Company issued common stock purchase warrants to two investors, Talos Victory Fund, LLC (“Talos”) and FirstFire Global Opportunities Fund (“FirstFire”), each for the purchase of 43,200,000 shares of Common Stock at an initial exercise price of $0.001 per share. The warrants were classified as equity, carried a five-year term expiring in September 2027, and contained anti-dilution provisions, including a price-only reset upon future dilutive issuances of Common Stock or Common Stock equivalents at a price below the then current exercise price, and a separate adjustment to both the exercise price and the number of warrant shares upon consummation of an offering resulting in the listing of the Common Stock on a national securities exchange. As of June 30, 2025, after adjustments made pursuant to these provisions, each warrant was exercisable for 2,556,213 shares of Common Stock at an exercise price of $0.0169 per share (5,112,426 shares in the aggregate). See Note 3 for the Company’s evaluation of the classification of these warrants under ASC 815-40.

A summary of the Company’s outstanding common stock warrants as of June 30, 2026 and 2025, and changes during those years, is as follows:

On April 19, 2026, the Company and Talos entered into a Warrant Cancellation Agreement pursuant to which Talos’s warrant, then exercisable for 2,556,213 shares, was cancelled and extinguished in its entirety for no cash or other consideration. The cancellation was accounted for as an equity transaction with no amount recorded, as no consideration was paid or received.

On April 24, 2026, the Company and FirstFire entered into a Warrant Cancellation Agreement pursuant to which the Company paid FirstFire $4,000 in cash, and FirstFire’s warrant, then exercisable for 2,556,213 shares, was cancelled and extinguished in its entirety. The cancellation was accounted for as an equity transaction, with the $4,000 cash payment recorded as a reduction of additional paid-in capital. The $4,000 cash payment is presented as “Repurchase of warrants” within financing activities in the consolidated statements of cash flows.

No warrants remained outstanding or exercisable as of June 30, 2026.

Preferred Stock – Overview and Capitalization Summary

The Company is authorized to issue preferred stock with such designations, rights, and preferences as may be determined from time to time by the Board of Directors. The following table summarizes the Company’s preferred stock as of June 30, 2026:

Series A Convertible Preferred Stock

Twenty million (20,000,000) shares of preferred stock are designated as Series A Convertible Preferred Stock, par value $0.001 per share. The certificate states an initial price of $0.25 per share and no fixed stated value. Each Series A share is convertible into one share of Common Stock; the certificate also states that if the Common Stock price is below $0.10 per share, conversion is set at $0.035 per share. Series A has no voting rights, is entitled to distributions on parity with other preferred stock as provided in the applicable designations, and is senior to Common Stock with respect to distributions.

Series B Convertible Preferred Stock

Ten million (10,000,000) shares of preferred stock are designated as Series B Convertible Preferred Stock, par value $0.001 per share. The certificate states an initial price of $0.25 per share and no fixed stated value. Each Series B share is convertible into five shares of Common Stock. Series B has no voting rights, is entitled to distributions on parity with other preferred stock as provided in the applicable designations, and is senior to Common Stock with respect to distributions.

Series AA Convertible Preferred Stock

In March 2018, the Company authorized and issued one share of Series AA Convertible Preferred Stock. During the year ended June 30, 2026, the Company amended its articles of incorporation to increase the authorized number of Series AA Convertible Preferred Stock to 100, and sold three additional shares of Series AA Convertible Preferred Stock to PT Smart Green Technologies, an affiliate of the Company by virtue of its ownership interest, for aggregate proceeds of $300,000. As of June 30, 2026, four shares of Series AA Convertible Preferred Stock were issued and outstanding (one held by the Company’s Chief Financial Officer and three held by PT Smart Green Technologies).

The Series AA Convertible Preferred Stock, voting as a class, is entitled in the aggregate to 51% of the votes on any matter submitted to a shareholder vote, regardless of the number of shares of common stock outstanding. Each share is convertible into one share of common stock. The $300,000 of proceeds from the three shares sold during fiscal 2026 was credited to additional paid-in capital because the aggregate par value of the shares is de minimis. See Item 12 for beneficial ownership and voting control.

Series D Convertible Preferred Stock (Temporary / Mezzanine Equity)

In April 2026, the Company issued an aggregate of 1,444,859 shares of Series D Convertible Preferred Stock, $0.001 par value per share, in exchange for $1,014,000 of promissory-note principal, $67,500 of convertible-note principal and $363,359 of amounts due to an officer and two former directors (see Notes 5, 6 and 12). Related accrued interest of $279,230 was separately forgiven and was not consideration for the Series D shares. The Series D shares were recorded at their aggregate fair value of $83,802, as described below, rather than at their $1,444,859 aggregate stated value. On September 21, 2026, after year-end, the Company issued an additional 35,000 shares of Series D Convertible Preferred Stock in exchange for four convertible notes payable (see Note 16 – Subsequent Events).

The Series D Convertible Preferred Stock was created pursuant to a Certificate of Designation adopted by the Board of Directors on April 14, 2026, executed on April 14, 2026 and filed with the Florida Department of State on April 16, 2026, designating 2,000,000 shares with a par value of $0.001 per share and a stated value of $1.00 per share. The Series D ranks junior to the Series AA Convertible Preferred Stock and Series E Convertible Preferred Stock, if issued, and senior to Common Stock, Series A Convertible Preferred Stock, and Series B Convertible Preferred Stock. Holders are entitled to cumulative dividends at 3% per annum on the stated value, payable quarterly in cash or, at the Company’s option, in additional shares of Series D Convertible Preferred Stock. Accrued and unpaid dividends are payable upon conversion, redemption, or liquidation. Upon liquidation, holders are entitled to a non-participating preference equal to the stated value plus accrued and unpaid dividends, in preference to Common Stock. Each share is convertible at the holder’s option at any time into shares of Common Stock at a fixed conversion price of $0.05 per share (subject to broad-based weighted-average anti-dilution adjustment). As a result, the 1,444,859 shares outstanding as of June 30, 2026 are convertible into approximately 28,897,180 shares of Common Stock before giving effect to accrued dividends. Holders have no general voting rights except as required by Florida law and vote together with Common Stock on an as-converted basis when entitled to vote. The Company may redeem the Series D Convertible Preferred Stock at 103% of stated value plus accrued dividends upon a Qualifying Transaction (generally a financing or change-of-control transaction with a value of at least $10,000,000).

Fair Value Measurement of Series D Convertible Preferred Stock Issued in Debt Exchanges

Management measured the fair value of the Series D Convertible Preferred Stock issued in the April 2026 debt-for-equity exchanges described above at $0.058 per share, or $83,802 in the aggregate for the 1,444,859 shares issued. Because the Series D Convertible Preferred Stock does not trade in an active market, management used a conversion-parity methodology: the Series D’s $1.00 stated value divided by its $0.05 fixed conversion price yields 20 shares of common stock per Series D share, and that ratio was multiplied by the volume-weighted average price of the Company’s common stock for the measurement period ($0.0029 per common share) ($1.00 / $0.05 x $0.0029 = $0.058). Management considered the Series D’s cumulative dividend, non-participating liquidation preference, anti-dilution protection, and issuer-controlled redemption right, and concluded that none of these features warranted a separately measurable premium or discount to conversion parity as of the measurement date. Because this measurement relies on an unobservable assessment of the Series D’s preferential rights, management has classified it within Level 3 of the fair value hierarchy (see Note 15).

The $83,802 aggregate fair value was allocated $1,445 to Series D par value and $82,357 to additional paid-in capital within temporary equity (mezzanine APIC). Of the 363,359 shares issued in settlement of $363,359 of advances and unreimbursed expenses, 4,200 shares were issued to Mark Lucky, the Company’s Chief Financial Officer and a director; the $3,956 excess of the $4,200 owed to him over the $244 fair value of the Series D shares issued to him was recognized as a capital contribution to additional paid-in capital, consistent with the related-party nature of that settlement (see Note 12). The remaining 359,159 shares were issued to Thomas Grbelja (351,159 shares) and Paul Favata (8,000 shares), who had resigned as directors on April 7, 2026 and were not related parties of the Company on April 16, 2026, the date on which the terms of their exchanges were agreed, the exchange agreements were signed and the Series D shares were issued; the $338,328 excess of the $359,159 owed to them over the $20,831 fair value of the Series D shares issued to them was recognized as a gain on extinguishment of debt (see Note 9). For the promissory-note and convertible-note holders (unrelated third parties), the excess of the $1,081,500 carrying amount of principal extinguished over the $62,727 fair value of Series D shares issued to them, together with separately forgiven related accrued interest, was recognized as a gain on extinguishment of debt (see Note 9).

Accounting Classification and Measurement

The Series D Convertible Preferred Stock is classified as temporary (mezzanine) equity in accordance with ASC 480-10-S99-3A because, under Section 5 of the Certificate of Designation, the Liquidation Preference (stated value plus accrued and unpaid dividends) becomes payable upon a Deemed Liquidation Event, such as a merger, sale of the Company or sale of substantially all of its assets, which could occur as a result of events that are not solely within the control of the Company. The Series D is not classified as a liability under ASC 480-10-25 because it has no mandatory redemption date, the holders have no right to require redemption, and the Company’s right to redeem the Series D at 103% of stated value plus accrued and unpaid dividends following a Qualifying Transaction (a financing or change-of-control transaction valued at $10 million or more) is exercisable solely at the Company’s option. As of June 30, 2026, the Series D was not currently redeemable and a Deemed Liquidation Event was not probable; accordingly, the Company has not remeasured the carrying amount of the Series D from its $83,802 issuance-date fair value (see the fair value measurement discussion above) to its Liquidation Preference of $1,453,766 (stated value of $1,444,859 plus $8,907 of accrued and unpaid dividends). Management will reassess at each reporting date whether a redemption event has become probable and, if so, will remeasure the carrying amount in accordance with ASC 480-10-S99-3A. Cumulative dividends of $8,907 had accrued as of June 30, 2026, calculated daily over the 75 days from the April 16, 2026 issuance date through June 30, 2026, but had not been declared by the Board of Directors. Because the dividends remain undeclared and the Series D is not mandatorily redeemable, no liability or interest expense has been recognized for the undeclared dividends; the undeclared dividends are reflected only in the computation of net income attributable to common stockholders.

As of June 30, 2026, cumulative undeclared dividends on the Series D Convertible Preferred Stock totaled $8,907. A roll-forward of the cumulative undeclared dividends is as follows:

Potential Dilution from Outstanding Convertible Securities and Preferred Stock

As of June 30, 2026, the Company’s outstanding Series A and Series B Convertible Preferred Stock (20,630,690 common shares in the aggregate), Series AA Convertible Preferred Stock (4 common shares), Series D Convertible Preferred Stock (28,897,180 common shares) and convertible notes payable (approximately 1,783 common shares) were convertible into an aggregate of approximately 49,529,657 shares of common stock, before giving effect to accrued Series D dividends or anti-dilution adjustments. No warrants or stock options were outstanding at June 30, 2026. See Note 2 for the related earnings-per-share computation and Note 16 for the September 21, 2026 Series D exchange.

Series E Convertible Preferred Stock

In April 2026, in connection with the proposed acquisition of ConnexUS AI Inc. (see Note 10), the Company authorized a new series of preferred stock designated as Series E Convertible Preferred Stock pursuant to a Certificate of Designation filed with the Florida Department of State on April 16, 2026. The Series E has a par value of $0.001 per share and a stated value of $750 per share, ranks senior to Common Stock and all other preferred stock other than the Series AA, and carries cumulative dividends of 8% per annum, compounded quarterly, payable in cash or, at the Company’s option, in additional shares of Series E. Each share is convertible at the holder’s option into 15,000 shares of Common Stock (a fixed conversion price of $0.05 per share), with no price-based anti-dilution protection. Voting is on an as converted basis together with Common Stock, subject to a 4.99% beneficial ownership cap per holder. The Company has a call right to redeem outstanding shares at 103% of stated value plus accrued dividends following a Qualifying Transaction.

The Certificate of Designation left the total number of authorized Series E shares to be fixed by a further Board resolution immediately prior to the closing of the ConnexUS AI transaction, calibrated so that Series E would represent approximately 40% of the Company’s fully diluted equity immediately after closing. Because that transaction did not close, the Board never fixed the number of authorized shares of Series E Convertible Preferred Stock. No shares of Series E were ever issued, and none are outstanding as of June 30, 2026. The designation remains on file with the Florida Department of State. The Board of Directors could in the future fix a share count and authorize the issuance of Series E Convertible Preferred Stock without further shareholder approval, which, given its terms, could result in substantial dilution to holders of the Company’s common stock (see Item 1A – Risk Factors).

Series G Governing Preferred Stock (Withdrawn)

On April 14, 2026, the Board of Directors adopted a Certificate of Designation authorizing 100 shares of Series G Governing Preferred Stock, par value $0.001 per share, carrying 100,000 votes per share and purporting to require the prior written consent of its holders before certain actions could be taken with respect to the Series A and Series B Convertible Preferred Stock. That certificate was filed with the Florida Department of State on April 16, 2026. The Company’s Current Report on Form 8-K filed April 16, 2026 stated that four shares of Series G Governing Preferred Stock had been issued to certain holders of Series AA Convertible Preferred Stock and/or affiliates of the Company. After review of the Company’s stock ledger, minute book, and related corporate records, the Board determined that no shares of Series G Governing Preferred Stock were in fact issued or outstanding at any time, that no consideration was received, and that the statement in the April 16, 2026 Form 8-K was incorrect. The Company filed a Current Report on Form 8-K/A on September 11, 2026 to correct that statement.

On September 11, 2026, the Board adopted, and the Company filed with the Florida Department of State, Articles of Amendment deleting the Certificate of Designation of Series G Governing Preferred Stock in its entirety pursuant to Section 607.1002(5) of the Florida Business Corporation Act, and reported that action on a Current Report on Form 8-K. No shares of Series G Governing Preferred Stock are authorized, issued, or outstanding as of the date of this Annual Report, and the Series G Certificate is of no further force or effect. The 100 shares formerly designated as Series G Governing Preferred Stock returned to the status of authorized but unissued preferred stock, undesignated as to series. The Series A Convertible Preferred Stock and the Series B Convertible Preferred Stock remain outstanding on the terms of their respective, unaltered Certificates of Designation and were not amended, subordinated, redeemed, or otherwise affected by the Series G Certificate or by its withdrawal. Management has concluded that the withdrawal does not require restatement of previously issued financial statements and does not give rise to a gain or loss, as no shares of Series G Governing Preferred Stock were ever issued or carried on the Company’s books.

Blank-Check Preferred Stock

The Company has authorized approximately 100,000,100 shares of “blank-check” preferred stock (remaining after the specific series designations above), which includes 100 shares previously designated as Series G Governing Preferred Stock that returned to undesignated status upon the Board’s withdrawal of that designation on September 11, 2026 (see “Series G Governing Preferred Stock (Withdrawn)” above). The Board of Directors may designate additional series of preferred stock from this authorization without further shareholder approval. Any such series could carry conversion, dividend, liquidation, or voting rights that adversely affect, or substantially dilute, the holders of the Company’s common stock.