Preferred Stock |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Equity [Abstract] | |
| Preferred Stock | Preferred Stock Rights and Preferences of the Series A, B and C Preferred Stock
The Series A, B and C Preferred Stock of the Company, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and winding up of the Company, ranks senior to all capital stock of the Company, unless the Required Holders (as defined in the applicable Certificate of Designations) consent to the creation of other capital stock of the Company that is senior or equal in rank to the specific series of Preferred Stock. For the avoidance of doubt, the Series A, B and C Preferred Stock ranks in parity with each other.
The holders of Series B and C Preferred Stock will be entitled to a 10% per annum dividends and holders of Series A Preferred Stock will be entitled to 5% per annum dividends. The dividends are payable to each record holder of the Preferred Stock in shares of Common Stock so long as there has been no Equity Conditions Failure (as defined in the applicable Certificate of Designations), and the Company may, at its option, under certain circumstances, capitalize the dividend by increasing the stated value of each Preferred Shares or elect a combination of the capitalized dividend and a payment in dividend shares.
Management has elected to capitalize dividends on each dividend date, which is the first Trading Day of the quarter after to which the dividend relates. During the three months ended June 30, 2026, dividends relating to the Series A, B and C Preferred Stock of $72,857, $59,779 and $67,377, respectively, were capitalized. During the six months ended June 30, 2026, dividends relating to the Series A, B and C Preferred Stock of $144,814, $140,993 and $87,377, respectively, were capitalized. The stated value of the Series A and B Preferred Stock increased to $1,064.08 and $1,066.68, respectively. The stated value of the Series C Preferred Stock was $1,020.08 for stock held by ATW I and $1,000 for stock held by a non related party investor. At June 30, 2026, dividends payable of $73,767, $53,680 and $65,026 relating to Series A, B and C Preferred Stock, respectively, were reported under other creditors in the Condensed Consolidated Balance Sheets. At December 31, 2025, dividends payable of $71,958, $71,399 and $16,753 relating to Series A, B and C Preferred Stock, respectively, were reported under other liabilities in the Condensed Consolidated Balance Sheets.
Series A Convertible Preferred Stock - A total of 5,546 shares of Series A Convertible Preferred Stock were outstanding as of June 30, 2026 of which 5,342 and 204 were held by related parties MIF and SLS Family Irrevocable Trust ("SLS"), respectively.
During the six months ended June 30, 2025, ATW I and SLS converted 14,438 and 2,300 shares of Series A Preferred Stock into 213,426 and 38,844 shares of Common Stock, respectively.
Series B Convertible Preferred Stock - A total of 2,013 shares of Series B Convertible Preferred Stock were outstanding at June 30, 2026, held by related party ATW II.
During the three and six months ended June 30, 2026, 250 and 800 shares of Series B Preferred Stock were converted into 67,436 and 214,217 shares of Common Stock, respectively.
Series C Convertible Preferred Stock - A total of 7,193 shares of Series C Convertible Preferred Stock were outstanding at June 30, 2026, of which 2,393 were held by related party ATW I.
On June 28, 2026, the Company entered into an Exchange Agreement pursuant to which a lender exchanged a total of $4,000,000 2023 Term Loan notes, with principal and interest amounts of $2,146,701 and $1,853,299, respectively, for 4,800 shares of Series C Convertible Preferred Stock with a stated value of $4,800,000. The fair value of the Series C Preferred Stock was $8,320,000 and a loss on extinguishment of debt of $4,320,000 was reported in the condensed consolidated statements of operations for the three and six months ended June 30, 2026.
During the six months ended June 30, 2026, November 2024 Debentures with a principal value of $2,000,000 and fair value of $2,729,994, were exchanged into 2,023 shares of Series C Preferred Stock. The fair value of the Series C Preferred
Stock was $3,659,502 and a loss on extinguishment of debt of $929,508 was reported in the condensed consolidated statements of operations for the six months ended June 30, 2026.
During the three and six months ended June 30, 2026, 1,384 and 1,784 shares of Series C Preferred Stock were converted into 967,330 and 1,034,650 shares of Common Stock, respectively.
Series D Convertible Preferred Stock
On February 6, 2026, the Company entered into a Securities Purchase Agreement and a registration rights agreement with Master Investment Group ("Investor"), pursuant to which the Company agreed to issue and sell in a private offering to Investor, (1) certain shares of Series D Convertible Preferred Stock of the Company, $0.0001 par value (the “Series D Preferred Stock”) for an aggregate purchase price of up to $3,000,000 and may issue additional shares of Series D Preferred Stock valued at up to $47,000,000 and (2) certain common stock purchase warrants (the “Warrants”) to purchase up to a number of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), equal to 30% of the aggregate purchase price (the “Preferred Offering”). The Preferred Offering also relates to the offering of the shares of the Common Stock issuable upon the conversion of or otherwise pursuant to the terms of the Series D Preferred Stock (“Conversion Shares”) and the shares of the Common Stock issuable upon the exercise of the Warrants.
Pursuant to the Purchase Agreement, the Company agreed to issue the Initial Preferred Shares for an aggregate purchase price of $3,000,000 in two closings, in each case following the demonstration that Investor has made expenditures agreed by, and on behalf of, the Company in an aggregate amount equal to the applicable milestone aggregate investment amount specified in the Purchase Agreement. At each such milestone closing, the Company will issue to Investor a number of shares of Series D Preferred Stock equal to the applicable milestone aggregate investment amount invested by Investor, at a price of $1,000 per share. The Company and Investor agree that the proceeds of the Preferred Offering will be deployed exclusively as UAE related working capital to fund and support, directly or indirectly, the establishment and operation of the Company’s business in the United Arab Emirates.
In addition, for a period of up to 3 years from the date of the Purchase Agreement (or such later date as mutually agreed to by the Company and Investor), by written notice from the Company to Investor and subject to other terms and conditions set forth in the Purchase Agreement, the Company may require the Investor to participate in one or more additional milestone closings and issue additional shares of Series D Preferred Stock to Investor up to an aggregate maximum purchase price of $47,000,000 in one or more tranches, and additional Warrants exercisable for an amount of shares of Common Stock with an aggregate initial value equal to 30% of the value of the Series D Preferred Stock to be issued at each such additional closings, subject to mutually agreed milestones, assignments, and definitive documentation, and in each case, consent of certain existing holders of securities of the Company.
The Purchase Agreement further provides for a two-year lock-up period, during which Investor shall not, without the prior written consent of the Company and certain existing holders of securities of the Company, sell, transfer, pledge or otherwise dispose of any shares of Common Stock upon conversion of the Series D Preferred Stock, nor enter into any swap or other arrangement that transfers the economic consequence of ownership of such shares.
Pursuant to the Registration Rights Agreement, the Company agreed that in the event that the Company files a registration statement with the Securities and Exchange Commission, registering the offer and sale of any shares of its Common Shares under the Securities Act, the Investor shall have the option to require the Company to include registration under the Securities Act of 1933, as amended (the “Securities Act”), of the resale by Investor of shares of Common Stock issuable upon conversion of the Series D Preferred Stock and upon the exercise of the Warrants.
The Purchase Agreement and the Registration Rights Agreement contain customary representations, warranties, conditions and indemnification obligations of the parties.
As of June 30, 2026 no Series D Preferred Shares have been issued as no services have been provided or exchanges made under the agreement as of the date of the issuance of these financial statements.
On July 6, 2026, the Company designated 50,000 shares of the Company’s authorized and unissued preferred stock as Series D Preferred Stock and established the rights, preferences and privileges of the Series D Preferred Stock pursuant to the Certificate of Designations of Series D Preferred Stock (the “Certificate of Designations”), filed with the Secretary of State of the State of Delaware (see Note 24 - "Subsequent Events").
Warrants
The Warrants, when issued pursuant to the Purchase Agreement, are immediately exercisable upon issuance and will expire on the fifth anniversary of the original issuance date. The Warrants have an initial exercise price equal to $8.90, subject to certain adjustments as described in the Warrant.
A Warrant holder will not have the right to exercise any portion of the Warrants to the extent that, after giving effect to such conversion, the holder would beneficially own in excess of 4.99% (the “Maximum Percentage”) of the number of shares of the Common Stock outstanding immediately after giving effect to such conversion.
Corrections to Certificates of Designations
On April 15, 2026, the Company filed with the Secretary of State of the State of Delaware, amendments to the Certificates of Designations of Rights and Preferences, respectively, of the Series A Convertible Preferred Stock, the Series B Convertible Preferred Stock, and the Series C Convertible Preferred Stock, to correct an error in each such instrument.
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