v3.26.3
Stockholders’ Equity
 9 Months Ended
Sep. 30, 2026
Stockholders’ Equity [Abstract]  
STOCKHOLDERS’ EQUITY
9. STOCKHOLDERS’ EQUITY

 

Common Stock

 

The Company is authorized to issue 65,466,666 shares of Class A Common Stock at a par value of $0.001 and had 10,078,844 and 7,380,426 shares of Class A Common Stock issued and outstanding as of September 30, 2026, and December 31, 2025, respectively.

 

The Company is authorized to issue 1,200,000 shares of Class B Common Stock at a par value of $0.001 and voting rights of 100 votes per share. The Company had 333,334 shares of Class B Common Stock issued and outstanding September 30, 2026, and 666,668 as of December 31, 2025.

 

Common Stock Issued for Services

 

The Company issued 4,167 shares of Class A Common Stock, at a price of $10.50 per share, for services provided to the Company during the nine months ended September 30, 2026.

 

Common Stock Issued for Cancellation and Exchange of Notes Payable and Related Interest Through Exercise of Warrants

 

During the nine months ended September 30, 2026, the Company issued 1,797,263 shares of Class A Common Stock upon the exercise of warrants in connection with the cancellation and exchange of notes and accrued interest at a weighted average price of $2.01.

 

Common Stock Issued Through Exercise of Warrants

 

On September 16, 2026, Boustead exercised 183,811 warrant shares on a cashless (net exercise) basis, using a fair market value of $8.26 per share. The Company issued 63,648 shares of Class A Common Stock and received no cash proceeds.

 

Common Stock Issued for Purchase of Intellectual Property

 

The Company acquired intellectual property by paying 500,000 shares of Class A Common Stock valued at $3,652,350 or $7.30 per share.

 

Conversion of Class B Common Stock to Class A Common Stock

 

During the nine months ended September 30, 2026, 333,334 shares of Class B Common Stock were converted into shares of Class A Common Stock.

 

Preferred Stock

 

The Company is authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001 per share. The Company filed a Certificate of Designation with the Secretary of State of the State of Nevada on October 13, 2025, designating 1,000 shares of the Company’s preferred stock as “Series X Convertible Preferred Stock” (the “Series X Preferred Stock”) and setting forth the voting and other powers, preferences and relative, participating, optional or other rights of the Series X Preferred Stock. Each share of Series X Preferred Stock has an initial stated value of $3.85 per share. On March 31, 2026, the Company filed a Certificate of Amendment to Designation with the Secretary of State of the State of Nevada increasing the designated shares of Series X Preferred Stock to 6,000. Additionally, on March 31, 2026, the Company issued 5,000 shares of Series X Preferred Stock to Karl Kit, who serves as the Company’s Chief Executive Officer, President, and member of the board of directors. Each share of Series X Preferred Stock is convertible into one (1) share of Class A Common Stock and entitles the holder to 15,000 votes per share. The Company had 6,000 and 1,000 shares of Series X Preferred Stock issued and outstanding as of September 30, 2026, and December 31, 2025, respectively.

 

Options

 

During the nine months ended September 30, 2026, the Company issued 333,334 stock options with weighted average strike price of $7.48.

 

Of the 1,625,343 options outstanding as of September 30, 2026, 333,334 options will only vest upon listing on any national securities exchange. This performance condition is not considered probable until it occurs. As such, the expense for these awards would only be recognized upon listing on any national securities exchange. The total Black-Scholes valuation for the outstanding options as of September 30, 2026, is $2,244,350.

 

The Company recognizes compensation cost on a straight-line basis over the total requisite service period of the entire award and accounts for forfeitures as they occur. Total expenses of $0 and $765,792 were recognized during the three months and nine months ended September 30, 2026, respectively.

 

The following table reflects a summary of Class A Common Stock options outstanding and option activity during the nine months ended September 30, 2026:

 

    Underlying
Shares		     Weighted
Average
Exercise
Price		     Weighted
Average
Terms
(Years)		  
Options outstanding at December 31, 2025     1,768,345     $ 5.44       8.4  
Granted     333,334       7.48       -  
Exercised     -       -       -  
Forfeited     (321,878 )     -       -  
Cancelled     (154,458 )     -       -  
Options outstanding at September 30, 2026     1,625,343     $ 7.45       8.3  
Options exercisable at September 30, 2026     802,736       6.78       8.0  

 

The intrinsic value of options outstanding as of September 30, 2026, was $955,783.

 

Warrants

 

During the nine months ended September 30, 2026, the Company issued a total of 1,937,910 warrants at a weighted average exercise price of $1.65 with a range between $1.50 and $5.40 per share, which vested immediately.

 

The Company conducted private placements of units, with each unit consisting of an unsecured promissory note with an interest rate of 18% and a five-year warrant to purchase shares of Class A Common Stock, with a number of investors. The Company raised $2,418,750 and issued 1,612,525 warrants with a $1.50 weighted average exercise price.

 

The Company extended the maturity date of $225,000 of original notes to December 31, 2026. The Company also cancelled 75,001 warrants and granted 170,477 warrants at a weighted average price of $1.50.

 

The Company issued 74,074 warrants to Boustead Securities, LLC in connection with the termination of its prior engagement agreement. The remaining 80,834 warrants were issued to advisors and partners.

 

On the dates of the grants, the Company valued warrants granted at a weighted average grant-date fair value of $1.67 per warrant using the Black-Scholes option pricing model with the following assumptions: an expected life of the warrants of 5 years, expected volatility of 72%, an average risk-free rate of 4%, and no dividend yield. The warrants were expensed at the time of issuance and an expense of $906,813 was recognized.

 

The following table reflects a summary of warrants outstanding and activity during the nine months ended September 30, 2026:

 

    Underlying
Shares		     Weighted
Average
Exercise
Price		     Weighted
Average
Terms
(Years)		  
Warrants outstanding at December 31, 2025     1,433,409       2.88       3.82  
Granted     1,937,910       1.65       5.00  
Exercised     (1,793,006 )     -       -  
Forfeited     -       -       -  
Cancelled     (75,001 )     -       -  
Warrants outstanding at September 30, 2026     1,503,312     $ 3.80       3.82  
Warrants exercisable at September 30, 2026     1,503,312       3.80       3.82  

 

The intrinsic value of warrants outstanding as of September 30, 2026, was $4,141,015.