Stockholders Equity

6 Months Ended

Jun. 30, 2025

Stockholders Equity

Stockholders' Equity

Note 11 – Stockholders’ Equity

Amended Articles of Incorporation

Effective on March 17, 2025, the Company amended its Articles of Incorporation to increase the authorized shares to 1,030,000,000 shares, of which 1,000,000,000 shares are common stock and 30,000,0000 shares are preferred stock.

Preferred Shares

Shares Outstanding

The Company is authorized to issue up to 30,000,000 shares of Preferred Stock, par value $0.0001 per share.

Series A Preferred Stock

The Company originally designated 10,000,000 shares of its Preferred Stock as Series A Convertible Preferred Stock. On March 17, 2025, the Company amended and restated its Series A Convertible Preferred Stock to designate 10,000,000 shares of its Preferred Stock as Series A Preferred Stock, par value $0.0001, with the following rights and privileges.

Dividends. Holders of shares of Series A Preferred Stock are not entitled to receive dividends.

Voting Rights. Each share of Series A Preferred Stock is entitled to 1,000 votes on all matters submitted to a vote of the holders of Common Stock, voting together with the holders of Common Stock as a single class. Holders of shares of Series A Preferred Stock do not have cumulative voting rights. This means a holder of a single share of Series A Preferred Stock cannot cast more than one vote for each position to be filled on the Board of Directors.

Other Rights. Shares of Series A Preferred Stock are not entitled to a liquidation preference. The holders of the Series A Preferred Stock may not be redeemed without the consent of the holders of the Series A Preferred Stock. The holder of the Series A Preferred Stock are not entitled to pre-emptive rights or subscription rights.

As of June 30, 2025 and December 31, 2024, there were 10,000,000 shares of Series A Preferred stock issued and outstanding. 

Series C Convertible Preferred Stock

The Company has designated 10,000,000 shares of its Preferred Stock as Series C Convertible Preferred Stock with the following rights and privileges.

Dividends. Holders of shares of Series C Convertible Preferred Stock are not entitled to receive dividends.

Voting Rights. The holders of the Series C Convertible Preferred Stock are not entitled to vote.

Conversion Rights. Each share of Series C Convertible Preferred Stock outstanding as such time shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into 20 shares of the Common Stock of the Company (the “Conversion Ratio”). Such Conversion Ratio, and the rate at which shares of Series C Convertible Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment.

Other Rights. The holders of the Series C Convertible Preferred Stock are not entitled to a liquidation preference. The holders of the Series C Convertible Preferred Stock may not be redeemed without the consent of the holders of the Series C Convertible Preferred Stock. The holder of the Series C Convertible Preferred Stock are not entitled to pre-emptive rights or subscription rights.

During the six months ended June 30, 2025, the Company issued 344,007 shares of Series C Preferred Stock as follows:

· 27,500 shares for purchase subscriptions of $260,000, at prices of $4.00 or $6.00 per share

· 236,507 shares for services, valued at $4,860,875 at market price on issuance dates.

· 80,000 shares for compensation, valued at $1,520,720 at market price on issuance dates.

In January and April 2025, the holders of the Convertible Series C Preferred Stock converted 776,831 and 532,638 shares of the Company’s Convertible Series C Preferred Stock into 15,536,620 and 10,652,760 shares of the Company’s common stock respectively.

As of June 30, 2025 and December 31, 2024, there were 2,036,507 and 3,001,969 shares of the Company’s Series C Convertible Preferred Stock issued and outstanding, respectively.

Common Stock 

The holders of shares of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. The holders of Common Stock are entitled to equal dividends and distributions, with respect to the Common Stock when, as, and if declared by the Board of Directors from funds legally available for such dividends. No holder of Common Stock has any preemptive right to subscribe for any of our stock nor are any shares subject to redemption. Upon our liquidation, dissolution, or winding up, and after payment of creditors and any amounts payable to senior securities, the assets will be divided pro rata on a share-for-share basis among the holders of the shares of Common Stock.

No holder of shares of Common Stock of the Company shall be entitled as of right to purchase or subscribe for any part of any unissued stock of the Company or of any new or additional authorized stock of the Company of any class whatsoever, or any issue of securities of the Company convertible into stock, whether such stock or securities be issued for money or consideration other than money or by way of dividend, but any such unissued stock or such new or additional authorized stock or such securities convertible into stock may be issued and disposed of to such persons, firms, corporations and associations, and upon such terms as may be deemed advisable by the Board of Directors without offering to stockholders then of record or any class of stockholders any thereof upon the same terms or upon any terms.

During the six months ended June 30, 2025, the Company issued 29,245,272 shares of common stock as follows:

· 26,189,380 shares for conversion of Series C Preferred Stock.

· 3,045,892 shares for conversion of debt of $5,604,442.

· 10,000 shares for services, valued at $19,000.

As of June 30, 2025 and December 31, 2024, there were 66,086,853 and 36,841,581 shares of the Company’s common stock issued and outstanding, respectively.

Management stock compensation (PSU)

On April 1, 2025, the Company entered into the consulting agreement with our CEO. The consulting fee is as s follows;

· 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $120,000,000;

· 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $150,000,000;

· 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $200,000,000; and

· 70,000 shares of the Company’s Series C Convertible Preferred Stock when the Company's market capitalization reaches and sustains a market capitalization for 30 consecutive days above $250,000,000

The Company used the Monte Carlo model to calculate the fair value of compensation and estimated the grant date fair value of $1,932,000. The Company records compensation expense over the term of a derived service period unless the condition is satisfied at an earlier date. During the three and six months ended June 30, 2025, the Company recorded compensation expense of $767,669. As of June 30, 2025, unrecognized compensation cost for unvested equity awards was $1,164,331, which is expected to be recognized over a remaining weighted-average period of 0.40 years.

For the six months ended June 30, 2025, the estimated fair values of the compensation measured used the following significant assumptions: 

	April 1
	2025
Derived service period	0.56 – 0.76 year
Risk-free interest rate		3.97	%
Stock price at valuation date	$	1.10
Expected average volatility		108.5	%
First Capitalization Thresholder per share price	$	2.29
Second Capitalization Thresholder per share price	$	2.86
Third Capitalization Thresholder per share price	$	3.82
Fourth Capitalization Thresholder per share price	$	4.77

Warrants

The Company issued a total of 5,093,750 warrants for a period of five years at an exercise price per share of $0.50 in connection with convertible notes for the six months ended June 30, 2025. The Company recorded the warrants of $710,845 to additional paid in capital.

The Company issued 4,000,000 warrants for a period of five years at an exercise price per share of $0.01 for consulting services, for the six months ended June 30, 2025. Each 1,000,000 warrants are exercisable on September 7, 2025, March 7, 2026, September 7, 2026 and March 7, 2027. The Company recorded a financing expense of $6,167,334 to additional paid in capital.

The Company issued a total of 671,375 warrants at an exercise price per share of $0.44 for financing expense of convertible notes issued in 2025 and 2024. Warrants are exercisable on September 7, 2025, and are for a period of five years following the initial exercise date. The Company recorded the warrants of $827,991 to additional paid in capital.

The Company issued a total of 1,620,000 warrants for a period of five years at an exercise price per share of $0.50 in connection with convertible notes for the year ended December 31, 2024. The Company recorded the warrants of $1,654,178 to additional paid in capital.

We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815. In addition to determining classification, we evaluate these instruments to determine if such instruments meet the definition of a derivative. The classification of all outstanding warrants, including whether such instruments should be recorded as equity, is evaluated at the end of each reporting period.

The warrants, were deemed to be equity instruments, and were valued using a Black Scholes valuation model. The use of this valuation model requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements.

The Company utilized the following assumptions:

	June 30,
	2025
Expected term	5.00 years
Expected average volatility	49.0% - 57.5		%
Risk-free interest rate	3.99% - 4.29		%
Expected dividend yield		-

A summary of activity of the warrants during the six months ended June 30, 2025 as follows:

	Warrants Outstanding				Weighted Average
			Weighted Average		Remaining
	Shares		Exercise Price		Contractual life (in years)
Outstanding, December 31, 2024		1,620,000	$	0.50		4.61
Granted		9,765,125		0.30		5.04
Exercised		-		-		-
Forfeited/canceled		-		-		-
Outstanding, June 30, 2025		11,385,125	$	0.32		4.62
Exercisable, June 30, 2025		6,713,750	$	0.50		4.52

The intrinsic value of the warrants as of June 30, 2025 is $18,508,714.