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EQUITY
 9 Months Ended
Sep. 30, 2025
Equity [Abstract]  
EQUITY

NOTE 5. EQUITY

 

Common Stock

 

The Company is authorized to issue 2,000,000,000 shares of common stock, $0.086 par value (the “Common Stock”). Each share of issued and outstanding common stock entitles the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the Company upon liquidation or dissolution.

 

During the first quarter of 2025, pursuant to a proposed business combination transaction, the Company issued to the selling parties 157,000 shares of Common Stock with a value of $239,425 as a second prepayment and additional non-refundable deposit on the proposed purchase price. See additional information regarding these shares in Note 8 – Commitments and Contingencies. Additionally, the Company issued 105,000 shares of Common Stock with a value of $141,750 for a service provider prepayment which was recorded to the prepaids and other current assets account on the condensed consolidated balance sheets as of September 30, 2025, and 462,605 shares for equity-based compensation under certain disclosed (see Equity-based Compensation) equity-based compensation programs.

 

During the second quarter of 2025, the Company issued service providers, 123,967 shares of Common Stock with a fair value of $150,000 in lieu of services to be provided, and 40 shares of equity-based compensation were issued to an executive as the final payment under a previously disclosed employment agreement.

 

During the third quarter of 2025, the Company issued a service provider, 110,668 shares of Common Stock with a fair value of $100,000 in lieu of services to be provided under a twelve month marketing agreement, and 2,388,563 shares for equity-based compensation under certain previously and currently disclosed (see Equity-based Compensation) equity based compensation programs.

 

As of September 30, 2025, and December 31, 2024, there were 9,375,127 and 2,250,210 shares of common stock outstanding, respectively.

 

Equity-based Compensation

 

During the first quarter of 2025 certain directors, executives, and employees were granted 999,995 shares of common stock in equity awards for the 2024 fiscal year, with a fair value of $2,049,675, vesting during the first and third quarters of 2025. For the three and nine month periods ended September 30, 2025 respectively, 537,390 and 462,605 shares were vested and issued with no share awards remaining unvested for these grants.

 

Pursuant to the April 2025 second amendment to an employment agreement between the Company and an executive, the executive was awarded 40,000 shares of the Company’s Common Stock annually over the four-year employment term, where each annual tranche vests equally at 10,000 shares each quarter, pro-rated for any partial periods. The total fair value of this award for all periods combined is $248,000. For the three and nine month periods ended September 30, 2025, 17,253 and 10,000 shares vested respectively, and 7,253 shares have been issued. Unrecognized compensation cost for this award as of September 30, 2025, was, $221,258, which will be recognized as described herein, through June 2029.

 

 

In June 2025, the Compensation Committee approved adjustments to the compensation structure for certain directors and executives. These included the grant of 1,692,673 restricted shares with a fair value of $2,495,000 under the Company’s 2025 Equity Incentive Plan (the “July Grant”). The July Grant was awarded to certain directors, officers, and employees and originally vested over periods between July 2025 and January 2026, however, on September 12, 2025, the Compensation Committee modified and accelerated the vesting schedules, whereby all remaining unvested components of these grants would vest immediately. In accordance with ASC 718, Compensation—Stock Compensation, the Company recognized the remaining unamortized compensation cost associated with the accelerated awards based on their original grant-date fair values, and no adjustment was made to reduce previously recognized compensation cost, irrespective of declines in the market price of the Common Stock between the original grant and modification dates. As of September 30, 2025, all shares related to the July Grant have been fully vested and issued. The Company also increased the base salary and approved an annual discretionary bonus for its Chief Executive Officer.

 

Pursuant to an equity-based commission compensation program at one of the Company’s subsidiaries which provides down-line agents the ability to earn and receive restricted stock awards upon completion of agreed upon service requirements, the Company grants annual restricted stock awards which have vesting or other restrictions of up to twelve months. For the three and nine month period ended September 30, 2025, approximately 151,236 shares were issued under the program, all fully vested as of September 30, 2025.

 

Total stock-based compensation expense recorded in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2025, and 2024 was $2,740,796 and $12,790, respectively, and for the nine months ended September 30, 2025 and 2024; $4,593,149 and $277,121, respectively.

 

2025 Equity Incentive Plan

 

On March 18, 2025, the Board approved, and subsequently the stockholders approved, the 2025 Equity Incentive Plan (the “Plan”). The purpose of the Plan is to provide a means through with the Company and its subsidiaries may attract and retain key personnel, and to provide a means whereby directors, officer, employees, consultants, and advisors of the Company and its subsidiaries can acquire and maintain an equity interest in the Company, or be paid incentive compensation, thereby strengthening their commitment to the welfare of the Company and its subsidiaries and aligning their interests with those of the Company’s stockholders. The Plan provides for various stock-based incentive awards, including incentive and nonqualified stock options, stock appreciation rights (“SARs”), restricted stock and restricted stock units (“RSUs”), and other equity-based or cash-based awards. The total number of shares of common stock authorized for issuance under the Plan is 2,000,000 shares. Following the July Grant, there remained 307,327 shares available for issuance under the Plan.

 

Administration of the Plan. The Plan is to be administered by the Compensation Committee of the Board. The Compensation Committee is authorized to select from among eligible employees, directors, and service providers those individuals to whom shares and options are to be granted and to determine the number of shares to be subject to, and the terms and conditions of the options. The Compensation Committee is also authorized to prescribe, amend, and rescind terms relating to options granted under the Plans. Generally, the interpretation and construction of any provision of the Plans or any shares and options granted hereunder is within the discretion of the Compensation Committee.

 

The Plan was approved by the Company’s stockholders on May 29, 2025, becoming effective as of March 18, 2025, and will terminate on March 18, 2035, unless terminated earlier by the Board.

 

As of September 30, 2025, there remained 118,503 shares available for issuance under the Company’s various equity incentive plans.

 

Series J Private Placement

 

On June 18, 2025, the Company entered into a securities purchase agreement (the “SPA-2025”) with a certain accredited investor (the “SPA Purchaser”) for the issuance and sale in a private placement (the “Private Placement-2025”) of (i) pre-funded warrants (the “Series J-PF Warrants”) to purchase up to 1,488,096 shares of the Company’s Common Stock at an exercise price of $0.001 per share, and (ii) warrants (the “Series J Warrants”) to purchase up to 2,976,192 shares of Common Stock at an exercise price of $1.43 per share. The Private Placement-2025 was priced at the market at a combined purchase price per share and accompanying Series J Warrant of $1.68. The closing of the Private Placement-2025 occurred on or about June 20, 2025.

 

Aggregate gross proceeds to the Company from the Private Placement-2025 were approximately $2.5 million, prior to deducting placement agent fees and other offering expenses payable by the Company, estimated at around $351,000, which resulted in estimated net proceeds of $2.15 million. The Company would receive an additional approximate $4.25 million in aggregate gross proceeds if all of the Series J Warrants were exercised via a cash exercise. The Company plans to use the proceeds from the Private Placement for working capital and general corporate purposes.

 

The Series J-PF Warrants are exercisable from the date of issuance until exercised in full. The Series J Warrants are exercisable from the date of issuance and expire two years from the Effective Date (as defined in the SPA-2025). The holder of the Series J-PF Warrants and the Series J Warrants may not exercise any portion of such holder’s Series J-PF Warrants or Series J Warrants to the extent that the holder, together with its affiliates, would beneficially own, respectively, more than 9.99% of 4.99% (or, at the election of the holder, 9.99%) of the Company’s outstanding shares of Common Stock immediately after exercise. In connection with the Private Placement-2025, the Company entered into a registration rights agreement (the “Registration Rights Agreement”), dated as of June 18, 2025, with the SPA Purchaser, to register for resale the common shares underlying the Series J-PF Warrants and Series J Warrants.

 


 

H.C. Wainwright & Co., LLC (“Wainwright”) acted as the Company’s sole placement agent in connection with the Private Placement-2025. Pursuant to the engagement terms, the Company paid Wainwright a total cash fee equal to 7.0% of the aggregate gross proceeds of the Private Placement-2025, as well as certain expenses, including $50,000 for legal fees and expenses, $35,000 for non-accountable expenses, and a management fee equal to 1.0% of the gross proceeds of the Private Placement-2025. In addition, the Company issued to Wainwright placement agent warrants (the “Series J PAW’s”) to purchase up to an aggregate of 104,167 shares of Common Stock at an exercise price equal to $2.10 per share. The Series J PAW’s have substantially the same terms as the Series J Warrants.

 

The Company determined pursuant to the terms of the Series J Warrants, Series J PF Warrants, and Series J PAW’s that they are equity instruments in nature, also because they permit the holder to obtain a fixed number of shares for a fixed monetary amount. The net proceeds were recorded to additional paid in capital on the condensed consolidated balance sheets as of September 30, 2025.

 

As of September 30, 2025, pursuant to the exercise of all Series J-PF Warrants, the Company issued to the SPA Purchaser, 1,488,096 shares of Common Stock; the exercise price was pre-paid as part of the SPA-2025 closing. None of the Series J Warrants or Series J PAW Warrants have been exercised, and they remain outstanding as of September 30, 2025.

 

Equity Line of Credit (ELOC)

 

On August 26, 2025, the Company entered into a Common Stock Purchase Agreement (the “ELOC”) and a related Registration Rights Agreement with an accredited investor (collectively, the “Investor Agreements”). Pursuant to the ELOC, the Company has the right, but not the obligation, to require Investor to purchase, from time to time and subject to the terms and conditions set forth therein, up to an aggregate of $10,000,000 of the Company’s Common Stock, following the effectiveness of a resale registration statement on Form S-1 which was declared effective by the SEC on September 4, 2025. Each purchase will be made at a price equal to the lowest traded price of the Company’s common stock during a three-hour valuation period following Investor’s acknowledgment of a purchase notice, with closings generally occurring the next business day, subject to customary settlement conditions. The agreement includes an Exchange Cap limiting issuances to 19.99% of the Company’s outstanding common stock as of the execution date unless stockholder approval is obtained or the average price paid for all shares issued equals or exceeds $0.9196, and a Beneficial Ownership Limitation preventing Investor from beneficially owning more than 4.99% (which may be increased to 9.99% upon 61 days’ prior written notice) of the Company’s outstanding common stock. The Company is obligated to issue the investor commitment shares valued at $100,000 due in two equal tranches of $50,000, during the third and fourth quarters of 2025, respectively. The Company issued the first tranche consisting of 53,186 shares of Common Stock valued at $50,000 during the quarter ended September 30, 2025.

 

Pursuant to the ELOC, as of September 30, 2025, the Company issued 450,000 shares of Common Stock for proceeds of $350,000, net of a one-time $10,000 documentation fee, and subsequent to the quarter-end, the Company issued an additional 300,000 shares for proceeds of $300,000, which resulted in net remaining capacity on the ELOC of $9,340,000.

 

Subsequent to the quarter end, on November 5, 2025, the Company entered into Amendment No. 1 to the Common Stock Purchase Agreement with White Lion Capital, LLC. The Amendment introduces a Fixed Purchase Notice mechanism with pricing at 90% of the lowest traded price during a five-minute pre-notice period, a 5% ADTV per-notice cap (unless waived), and next-business-day cash closing upon DWAC share delivery.

 

At-the-Market Offering Program

 

On August 13, 2025, the Company entered into an At-the-Market (“ATM”) Sales Agreement (the “ATM Agreement”) with H.C. Wainwright & Co., LLC (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time through the Sales Agent, shares of its common stock having an aggregate offering price of up to $2,026,453 (the “ATM Program”). Any shares offered and sold under the ATM Program are issued pursuant to the Company’s effective shelf registration statement on Form S-3 (File No. 333-275190), declared effective by the Securities and Exchange Commission (“SEC”) on November 7, 2023, together with the related base prospectus and prospectus supplement filed in connection with the ATM Program. On September 18, 2025, the Company filed Amendment No. 1 to the prospectus supplement to update and refresh the amount of common stock then available for sale under the ATM Program to $248,138, consistent with the limitations imposed by General Instruction I.B.6 of Form S-3. Sales of common stock, if any, are made in ordinary broker transactions that are deemed to be “at-the-market” offerings under Rule 415 of the Securities Act of 1933, as amended. The Sales Agent is entitled to a commission of 3% of the gross proceeds from each sale and to reimbursement of certain expenses. The ATM Agreement may be terminated by either party upon notice in accordance with its terms. The Company intends to use any net proceeds from sales under the ATM Program for general corporate purposes. Offering-related costs are recorded as a reduction of additional paid-in capital in the Condensed Consolidated Statements of Stockholders’ Equity.

 

During the three and nine months ended September 30, 2025, the Company sold 1,853,048 shares of Common Stock under the ATM Program, of which, 1,785,738 shares were issued as of September 30, 2025 and 67,310 shares were issued October 1, 2025, for net proceeds of $2,021,682. As of September 30, 2025, approximately $124,725 of Common Stock remained available for issuance under the ATM Program. Subsequent to September 30, 2025, the Company sold an additional 123,163 shares of Common Stock under the ATM Program for net proceeds of approximately $119,764, and approximately $360 of Common Stock remained available for issuance thereafter.

 

Dividends

 

On September 26, 2025, the Board of Directors declared a one-time cash dividend of $0.03 per share on the Company’s outstanding common stock, payable to shareholders of record as of the close of business on October 30, 2025 (the “Record Date”). The dividend is payable on December 2, 2025, and as of September 30, 2025, the Company recorded a total of $373,986 to dividends payable, a current liability in the condensed consolidated balance sheets, with a corresponding charge to additional paid in capital. This amount is inclusive of approximately $92,000 payable to the Companies warrant holders that are entitled to receive dividends for their underlying outstanding warrant shares.

 

Subsequent to quarter-end, the Company issued an additional 490,473 shares of common stock prior to the Record Date. These newly issued shares were entitled to receive the declared dividend, increasing the total expected dividend payable to $388,700. The additional shares and related dividend entitlement represent a non-recognized subsequent event under ASC 855, Subsequent Events, and did not affect amounts recorded as of September 30, 2025.