Equity |
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| Equity | 11. STOCKHOLDERS’ EQUITY AND CONTRIBUTED CAPITAL Reverse Stock Split – rescinded The Order rescinded the 1-for-1,200 reverse stock split of January 20, 2026; all share and per-share amounts are presented on the pre-split basis for all periods. No instruction has yet been given to the transfer agent or FINRA to implement the rescission or the cancellations; the register continued to show 9,222,729 post-split shares, and the transfer agent’s report as of October 16, 2026 showed the same holdings as at June 30, 2026. Preferred Stock The authorized preferred stock ($0.01 par value) and the effect of the Order on it, as determined by the Company, are as follows:
Series B, issued to Epazz, Inc. under the voided Management Services Agreement, is cancelled under ¶ 213. Series C and D, held by Dr. Passley, GG Mars Capital, Inc., Star Financial Corporation and Passley family members (51,196,002 and 8,845,370 shares), Cloud Builder, Inc. (7,700,000 Series C; Note 12) and L & F Lawn Service, Inc. (1,092,970 Series C and 238,260 Series D, which account for the difference between the Order’s count of 58,896,002 Series C shares and the register), are treated as cancelled under ¶ 212,. Series A (7,488,730 shares) and Series E (23,000,000 shares), issued to Dr. Passley, are presented as outstanding because the Order makes no finding as to their consideration, pending the custodian’s determination with counsel; if cancelled, $304,887 of par value would move to additional paid-in capital, with no effect on total equity. Series A is convertible at the holder’s option into and Series E into , all at once, with dividends contingent on revenue and income thresholds. Common Stock Authorized common stock is 11,000,000,000 shares of $0.001 par value (increased in July 2025 with the approval of Epazz, Inc. as majority voting holder; validity following the Order not determined). Shares outstanding after the cancellations:
On May 19, 2026 the Company issued 91,244 post-split shares (109,492,800 pre-split equivalent) to Maxim Group Partners, LLC for investment banking services, valued at $620,459 (Note 3); the shares are not addressed by the Order, were issued after the stay of share issuances found by the Court (¶¶ 91–92), and their status was raised in the motion for clarification (Note 14). The 30,000,000 shares issued to Cloud Builder, Inc. were cancelled on April 1, 2025, before the Order. The count above does not treat as cancelled 100,400 shares Dr. Passley bought in the market before his appointment; includes 516,270 shares issued in November 2020 on a Series A conversion the Court found contrary to the Articles (¶ 64); and deducts 50,000,000 shares issued to Epazz, Inc. in November 2020 that were transferred before the split and are held by transferees required by the Order to surrender them, so the register shows about that many more pre-split shares than the restated count. The final count will be determined when the register is conformed to the Order. Shares outstanding were 477,508,748 at June 30, 2026 and 368,015,948 at December 31, 2025, as restated. |