Everything Blockchain, Inc 10-Q for FY2024 Q1

Everything Blockchain, Inc. (EBZT)

10-Q 2023-06-14 For: 2023-04-30

Added on April 05, 2026

About this 10-Q

Everything Blockchain, Inc filed this 10-Q on June 14, 2023, covering the quarter ended April 30, 2023 (FY2024 Q1).

Headline figures

Quarter ended April 30, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $262K; up 2.7% from $255K a year earlier
Net loss: $1.82M; compared with a net loss of $1.45M a year earlier
Diluted EPS: -$0.18; compared with -$0.17 a year earlier

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Florida		82-1091922
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12574 Flagler Center Blvd, Suite 101 Jacksonville, FL		32258
(Address of principal executive offices)		(Zip Code)

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	19
Item 4.	Controls and Procedures	19

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	21
Item 1A.	Risk Factors	21
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	21
Item 3.	Defaults Upon Senior Securities	21
Item 4.	Mine Safety Disclosures	21
Item 5.	Other Information	21
Item 6.	Exhibits	22

SIGNATURES		23

*Everything Blockchain, Inc.*
Consolidated Balance Sheets (Amounts in thousands, except share and per share data)

ASSETS
	As of
	April 30,			January 31,
	2023			2023
	(unaudited)
Current assets
Cash	$	6		$	824
Accounts receivable, net		66			89
Inventory		74			64
Current cryptocurrencies, net		4			4
Prepaid expenses		2,541			2,663
Other assets		173			127
Total current assets		2,864			3,771
Property, plant and equipment, net		654			660
Goodwill		16,504			16,504
Intangible assets, net		4,439			4,270
Other assets		463			463
Total assets	$	24,924		$	25,668

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	1,497		$	1,151
Accounts payable related party		32			13
Current portion of long-term debt		479			474
Reserve for legal settlements		154			154
Deferred revenue		250			279
Total current liabilities	$	2,412		$	2,071
Long-term liabilities
Debt		40			47
Total long-term liabilities	$	40		$	47
Total liabilities	$	2,452		$	2,118
Stockholders’ equity
Series A Preferred stock, $0.0001 par value: 1,000,000 shares authorized; 200,000 shares issued and outstanding as of April 30, 2023 and January 31, 2023		-			-
Series B Preferred stock, $0.0001 par value: 1,500,000 shares authorized; 650,000 shares issued and 400,000 shares outstanding as of April 30, 2023 and January 31, 2023		-			-
Series C Preferred stock, $0.0001 par value: 2,000,000 shares authorized; 1,000,000 shares issued and outstanding as of April 30, 2023 and January 31, 2023		-			-
Common stock, $0.0001 par value, 200,000,000 shares authorized; 9,949,966 shares issued and 9,923,304 shares outstanding as of April 30, 2023 and January 31, 2023		1			1
Treasury stock		(1,691	)		(1,691	)
Additional paid-in capital		86,616			85,975
Receivable from stockholder		(100	)		(200	)
Accumulated deficit		(62,354	)		(60,535	)
Total stockholders’ equity	$	22,472		$	23,550
Total liabilities and stockholders’ equity	$	24,924		$	25,668

	For the Three Months Ended
	April 30,
	2023			2022
	(unaudited)
Revenue	$	262		$	255
Cost of sales		52			15
Gross profit	$	210		$	240
Selling, general, and administrative		1,230			1,093
Stock based compensation		716			803
Depreciation and amortization		59			50
Total operating expenses	$	2,005		$	1,946
Loss from operations		(1,795	)		(1,706	)
Other expense, net		(17	)		(160	)
Loss before income taxes	$	(1,812	)	$	(1,866	)
Income tax expense (benefit)		7			(412	)
Net loss	$	(1,819	)	$	(1,454	)

Basic and diluted loss per share:
Basic loss per share	$	(0.18	)	$	(0.17	)
Diluted loss per share	$	(0.18	)	$	(0.17	)
Weighted average shares outstanding - basic		9,923,304			8,665,836
Weighted average shares outstanding - diluted		9,923,304			8,665,836

	Preferred Stock				Common Stock
	Shares		Amount		Shares		Amount		Treasury Stock			Additional Paid-in Capital		Receivable from Shareholder			Accumulated Deficit			Total Stockholders’ Equity
	(unaudited)
Balance – January 31, 2022		600	$	-		8,604	$	1	$	(1,599	)	$	80,134	$	-		$	(51,091	)	$	27,445
Issuance of Series C Preferred		250		-		-		-		-			1,000		-			-			1,000
Warrant exercise		-		-		500		-		-			500		-			-			500
Stock based compensation		-		-		-		-		-			685		-			-			685
Net loss		-		-		-		-		-			-		-			(1,454	)		(1,454	)
Balance – April 30, 2022		850	$	-		9,104	$	1	$	(1,599	)	$	82,319	$	-		$	(52,545	)	$	28,176

Balance – January 31, 2023		1,600	$	-		9,923	$	1	$	(1,691	)	$	85,975	$	(200	)	$	(60,535	)	$	23,550
Warrant exercise		-		-		-		-		-			-		100			-			100
Stock based compensation		-		-		-		-		-			641		-			-			641
Net loss		-		-		-		-		-			-		-			(1,819	)		(1,819	)
Balance – April 30, 2023		1,600	$	-		9,923	$	1	$	(1,691	)	$	86,616	$	(100	)	$	(62,354	)	$	22,472

*Everything Blockchain, Inc.*
Consolidated Statements of Cash Flows (Amounts in thousands)

	For the Three Months Ended April 30,
	2023			2022
	(unaudited)
Cash flows from operating activities:
Net Loss	$	(1,819	)	$	(1,454	)
Adjustments to reconcile net loss to net
cash used in operating activities:
Stock based compensation		716			803
Deferred income tax benefit		-			(415	)
Realized net gain on investment in cryptocurrency		-			(26	)
Fair value adjustment to cryptocurrency		-			147
Amortization and depreciation		59			50
Changes in operating assets and liabilities:
Accounts receivable, net		23			(48	)
Inventory		(10	)		(23	)
Prepaid expenses		47			51
Other assets		(46	)		(17	)
Accounts payable to related party		19			(6	)
Accounts payable and accrued expenses		352			250
Deferred revenue		(29	)		152
Net cash used in operating activities		(688	)		(536	)
Cash flows from investing activities:
Capital expenditures		(222	)		(319	)
Net cash used in investing activities		(222	)		(319	)

Cash flows from financing activities:
Payment of debt		(8	)		(8	)
Proceeds from issuance of Series C Preferred Stock		-			1,000
Proceeds from exercise of warrants		100			500
Net cash provided by financing activities		92			1,492
Net Change in Cash		(818	)		637
Cash, beginning of period		824			1,062
Cash, end of period	$	6		$	1,699

Supplemental Disclosure of Cash Flows Information:
Cash paid for interest	$	17		$	13
Cash paid for income taxes	$	-		$	3

	·	identification of the contract, or contracts, with a customer;

	·	identification of the performance obligations in the contract;

	·	determination of the transaction price;

	·	allocation of the transaction price to the performance obligations in the contract; and

	·	recognition of revenue when, or as, we satisfy a performance obligation.

- Level 1:	Quoted prices in active markets for identical instruments;
- Level 2:	Other significant observable inputs (including quoted prices in active markets for similar instruments);
- Level 3:	Significant unobservable inputs (including assumptions in determining the fair value of certain investments).

	As of April 30, 2023
	Gross Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
IP/Technology	$	4,452	$	21	$	4,431
Non-compete agreements		82		74		8
Total Intangibles	$	4,534	$	95	$	4,439

	As of January 31, 2023
	Gross Amount		Accumulated Amortization		Net Carrying Amount
	(in thousands)
IP/Technology	$	4,251	$	-	$	4,251
Non-compete agreements		82		63		19
Total Intangibles	$	4,333	$	63	$	4,270

Current Assets
	As of
	April 30, 2023		January 31, 2023
Coin Symbol	FMV
BTC	$	4	$	4
	$	4	$	4

	As of
	April 30, 2023			January 31, 2023
Land	$	36		$	36
Buildings and building improvements		339			339
Machinery and equipment		210			211
Furniture, fixtures and office equipment		77			75
Computer equipment and computer software		126			114
Vehicles		69			60
		857			835
Less: Accumulated depreciation		(203	)		(175	)
Total property, plant and equipment, net	$	654		$	660

Related party balance sheet items (in thousands)

	As of April 30, 2023		As of January 31, 2023

Prepaid expenses	$	2,000	$	2,000
Accounts payable and accrued expenses		67		28
Loans payable		32		13

Related party income statement items (in thousands)

	For the Three Months Ended April 30,
	2023		2022

Consulting expenses	$	66	$	30
Payroll expenses		119		195
Stock based compensation		650		575

			Weighted
			Average
			Conversion
	Shares		Price

Warrants outstanding at January 31, 2023		3,356,000	$	3.60
Warrants outstanding at April 30, 2023		3,356,000	$	3.60

3.1		Amended and Restated Articles of Incorporation dated April 12, 2023

3.2		Amended and Restated Bylaws dated April 18, 2023

31.1		Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

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101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.

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104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

	Everything Blockchain, Inc.

Dated: June 14, 2023	By:	/s/ Toney Jennings
		Toney Jennings
	Its:	Chief Executive Officer (Principal Executive Officer)

(a)	NAME

	(1)	The name of the corporation shall be “Everything Blockchain, Inc.”.

	■	Two Hundred Million Common Shares [200,000,000]
	■	Two Hundred Thousand Series A Preferred Shares [200,000]
	■	Four Hundred Thousand Series B Preferred Shares [400,000]
	■	Ten Million Series C Preferred Shares [10,000,000]
	■	Forty Million Blank Check Preferred Stock [40,000,000]

	(2)	Dividends. No dividend shall be declared or paid on the Series A Preferred Stock.

	(3)	Voting Rights. Except as otherwise provided herein or by law, the shares of the Series A Preferred Stock shall be entitled to vote with the shares of the Corporation’s Common Stock at any annual or special meetings of the stockholders of the Corporation. Each share of Series A Preferred Stock shall be entitled to vote those number of shares equal to one thousand [1,000] times the amount of the Series A Preferred Stock held by the shareholder. The Series A Preferred shareholders, representing a majority of the Series A Preferred class, through the ownership of the Series A Preferred Stock, has the voting power to act on behalf of the Corporation, to call a special meeting of the shareholders, to remove and/or replace the Board of Directors or management or any individual members thereof in the event that one or more of the foregoing has done, or failed to do, anything which, in its sole judgement, will materially and adversely impact the business of the Corporation in any manner whatsoever, including, but not limited to, any violations of any state or federal securities laws, or any action which would cause the bankruptcy, dissolution, or other termination of the Corporation. In no event will the majority holders of the Series A Preferred class have the right or power to participate in the normal and usual daily operations of the Corporation.

	(4)	Notices. Any notice required by the provisions hereof to be given to the holders of shares of the Series A Preferred Stock shall be deemed given when deposited in the United States mail, postage prepaid, and addressed to each holder of record at their address appearing on the books of the Corporation.

	(5)	Conversion.

	(i)	*Conversions at Option of Holder*. Each share of Series A Preferred Stock shall be convertible, at the discretion of holders, into fifty [50] shares of Common Stock, after twenty-four [24] months of ownership (the “Series A Conversion Rate”). The holders of the Series A Preferred Stock shall affect conversions by providing the Corporation with a form of conversion notice (a “Notice of Conversion”). The Notice of Conversion shall specify the number of shares of Series A Preferred Stock to be converted, the number of shares of Series A Preferred Stock owned prior to the conversion at issue, and the date on which such conversion is to be affected, which date may not be prior to the date the holder delivers such Notice of Conversion to the Corporation’s principal address via FedEx Express (the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered via FedEx Express. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions, as the case may be, of shares of Series A Preferred Stock, a holder shall be required to surrender the certificate(s) representing such shares of Series A Preferred Stock to the Corporation promptly following the Conversion Date at issue. Shares of Series A Preferred Stock converted or redeemed in accordance with the terms hereof shall be canceled and may not be reissued.

	(ii)	*Mechanics of Conversion*.

	(B)	Obligation Absolute. The Corporation’s obligations to issue and deliver the Conversion Shares upon conversion of Series A Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the holder or any other person of any obligation to the Corporation or any violation or alleged violation of law by the holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to the holder in connection with the issuance of such Conversion Shares.

	(C)	Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of the Series A Preferred Stock and payment of dividends on the Series A Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the holders, not less than such number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of herein) upon the conversion of all outstanding shares of Series A Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued, and fully paid, non-assessable.

	(D)	Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of the Series A Preferred Stock shall be made without charge to the holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holder of such shares of Series A Preferred Stock so converted and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

	(E)	Stock Dividends and Stock Splits. If the Corporation, at any time while the Series A Preferred Stock is outstanding, effectuates any of the following actions (each defined herein as a “Corporate Action”):

	■	a stock dividend or otherwise make a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Corporation pursuant to this Series A Preferred Stock);

	■	subdivision of outstanding shares of Common Stock into a larger number of shares;

	■	combination (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares; or

	■	issuance, by reclassification of shares of the Common Stock, any shares of capital stock of the Corporation,

		then, for holders of Series A Preferred Stock, the Series A Conversion Rate shall apply. The Corporate Action is deemed effectuated as of the record date of the Corporate Action, if applicable. If no record date exists, the Corporate Action shall be deemed effectuated as of the effective date of the Corporate Action.

	(6)	Calculations. All calculations under this Section shall be made to the nearest cent or the nearest 1/100th of a share. The number of shares of common stock outstanding at any given time shall not include stock owned or held by or for the account of the Company, and the description of any such common stock shall be considered on issue or sale of common stock. For purposes of this Section, the number of shares of common stock considered to be issued and outstanding as of a given date shall be the sum of the number of shares of common stock (excluding treasury shares, if any) issued and outstanding. Whenever the Conversion Price is adjusted pursuant to any of this Section, the Corporation shall promptly mail to each holder a notice setting forth the implemented Conversion Price after such adjustment, setting forth a brief statement of the facts requiring such adjustment. Whenever the Conversion Price is adjusted pursuant to any of this Section, the Corporation shall promptly mail to each holder a notice setting forth the Conversion Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.

	(7)	Lost or Stolen Certificates. Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock certificates representing the shares of Series A Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Company and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue Preferred Stock certificates if the holder contemporaneously requests the Company to convert such shares of Series A Preferred Stock into Common Stock.

	(8)	Remedies, Characterizations, Other Obligations, Breaches, and Injunctive Relief. The remedies provided herein shall be cumulative and in addition to all other remedies available at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Company to comply with the terms of these Articles. Amounts set forth or provided for herein with respect to payments, conversion, and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series A Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holders of the Series A Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

	(9)	Specific Shall Not Limit General; Construction. No specific provision contained herein shall limit or modify any more general provision contained herein.

	(10)	No Waiver. No failure or delay on the part of a holder of Series A Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power, or privilege.

	(11)	No Preemptive Rights. No holder of the Series A Preferred shall be entitled as of right to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class or bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares may be issued and disposed of by the Board of Directors on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board of Directors in their absolute discretion may deem advisable.

	(12)	Legends. Any certificate evidencing the Series A Preferred Stock and the securities issued upon conversion of the Series A Preferred Stock shall bear legends in substantially the following form:

	(1)	Designation and Rank. The designation of such series of the Preferred Stock shall be the Series B Preferred Stock, par value $0.0001 per share (the “Series B Preferred Stock”). The maximum number of shares of Series B Preferred Stock shall be FOUR HUNDRED THOUSAND [400,000]. The Series B Preferred Stock shall rank senior to the Company’s Common Stock and Series A Preferred Stock. The Series B Preferred Stock shall be subordinate to and rank junior to all indebtedness of the Company now or hereafter outstanding.

	(2)	Dividends. No dividend shall be declared or paid on the Series B Preferred Stock.

	(3)	Voting Rights. Except as otherwise provided herein or by law, the shares of the Series B Preferred Stock shall be entitled to vote with the shares of the Corporation’s Common Stock at any annual or special meetings of the stockholders of the Corporation. Each share of Series B Preferred Stock shall be entitled to vote those number of shares equal to one hundred [100] times the amount of the Series B Preferred Stock held by the shareholder.

	(4)	Notices. Any notice required by the provisions hereof to be given to the holders of shares of the Series B Preferred Stock shall be deemed given when deposited in the United States mail, postage prepaid, and addressed to each holder of record at their address appearing on the books of the Corporation.

	(5)	Conversion.

	(A)	Delivery of Certificate Upon Conversion. Not later than three [3] trading days after each Conversion Date (the “Share Delivery Date”), the Corporation shall deliver to the holder (i) a certificate or certificates which, after the Effective Date, representing the number of shares of Common Stock being acquired upon the conversion of shares of Series B Preferred Stock, and (ii) a bank check in the amount of accrued and unpaid dividends (if the Corporation has elected or is required to pay accrued dividends in cash. If in the case of any Notice of Conversion such certificate or certificates are not delivered to or as directed by the applicable holder by the third trading day after the Conversion Date, the holder shall be entitled to elect by written notice to the Corporation at any time on or before its receipt of such certificate or certificates thereafter, to rescind such conversion, in which event the Corporation shall immediately return the certificates representing the shares of Series B Preferred Stock tendered for conversion.

	(B)	Obligation Absolute. The Corporation’s obligations to issue and deliver the Conversion Shares upon conversion of Series A Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the holder or any other person of any obligation to the Corporation or any violation or alleged violation of law by the holder or any other person, and irrespective of any other circumstance which might otherwise limit such obligation of the Corporation to the holder in connection with the issuance of such Conversion Shares.

	(C)	Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times reserve and keep available out of its authorized and unissued shares of Common Stock solely for the purpose of issuance upon conversion of the Series B Preferred Stock and payment of dividends on the Series B Preferred Stock, each as herein provided, free from preemptive rights or any other actual contingent purchase rights of persons other than the holders, not less than such number of shares of the Common Stock as shall be issuable (taking into account the adjustments and restrictions of herein) upon the conversion of all outstanding shares of Series B Preferred Stock. The Corporation covenants that all shares of Common Stock that shall be so issuable shall, upon issue, be duly and validly authorized, issued, and fully paid, non-assessable.

	(D)	Transfer Taxes. The issuance of certificates for shares of the Common Stock on conversion of the Series B Preferred Stock shall be made without charge to the holders thereof for any documentary stamp or similar taxes that may be payable in respect of the issue or delivery of such certificate, provided that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any such certificate upon conversion in a name other than that of the holder of such shares of Series B Preferred Stock so converted and the Corporation shall not be required to issue or deliver such certificates unless or until the person or persons requesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to the satisfaction of the Corporation that such tax has been paid.

	(7)	Lost or Stolen Certificates . Upon receipt by the Company of evidence satisfactory to the Company of the loss, theft, destruction or mutilation of any Preferred Stock certificates representing the shares of Series A Preferred Stock, and, in the case of loss, theft or destruction, of any indemnification undertaking by the holder to the Company and, in the case of mutilation, upon surrender and cancellation of the Preferred Stock certificate(s), the Company shall execute and deliver new preferred stock certificate(s) of like tenor and date; provided, however, the Company shall not be obligated to re-issue Preferred Stock certificates if the holder contemporaneously requests the Company to convert such shares of Series B Preferred Stock into Common Stock.

	(8)	Remedies, Characterizations, Other Obligations, Breaches, and Injunctive Relief. The remedies provided herein shall be cumulative and in addition to all other remedies available at law or in equity (including a decree of specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual damages for any failure by the Company to comply with the terms of these Articles. Amounts set forth or provided for herein with respect to payments, conversion, and the like (and the computation thereof) shall be the amounts to be received by the holder thereof and shall not, except as expressly provided herein, be subject to any other obligation of the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the holders of the Series B Preferred Stock and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that, in the event of any such breach or threatened breach, the holders of the Series B Preferred Stock shall be entitled, in addition to all other available remedies, to an injunction restraining any breach, without the necessity of showing economic loss and without any bond or other security being required.

	(9)	Specific Shall Not Limit General; Construction. No specific provision contained herein shall limit or modify any more general provision contained herein.

	(10)	No Waiver. No failure or delay on the part of a holder of Series B Preferred Stock in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power, or privilege.

	(11)	No Preemptive Rights. No holder of the Series B Preferred shall be entitled as of right to subscribe for, purchase or receive any part of any new or additional shares of any class, whether now or hereinafter authorized, or of bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares of any class, but all such new or additional shares of any class or bonds or debentures, or other evidences of indebtedness convertible into or exchangeable for shares may be issued and disposed of by the Board of Directors on such terms and for such consideration (to the extent permitted by law), and to such person or persons as the Board of Directors in their absolute discretion may deem advisable.

	(12)	Legends. Any certificate evidencing the Series B Preferred Stock and the securities issued upon conversion of the Series A Preferred Stock shall bear legends in substantially the following form:

	(i)	Conversions at Option of Holder. Each share of Series C Preferred Stock shall be convertible, at the discretion of holders, after six [6] months of ownership. Each share of Series C Preferred Stock shall be convertible, at the discretion of holders, into shares of Common Stock. The number of common shares issued shall be at the rate of 30% less than the VWAP or $5.00 per share, whichever is less (the “Series C Conversion Rate”). The holders of the Series C Preferred Stock shall affect conversions by providing the Corporation with a form of conversion notice (a “Notice of Conversion”). The Notice of Conversion shall specify the number of shares of Series C Preferred Stock to be converted, the number of shares of Series C Preferred Stock owned prior to the conversion at issue, and the date on which such conversion is to be affected, which date may not be prior to the date the holder delivers such Notice of Conversion to the Corporation’s principal address via FedEx Express (the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Date shall be the date that such Notice of Conversion to the Corporation is deemed delivered via FedEx Express. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions, as the case may be, of shares of Series C Preferred Stock, a holder shall be required to surrender the certificate(s) representing such shares of Series C Preferred Stock to the Corporation promptly following the Conversion Date at issue. Shares of Series C Preferred Stock converted or redeemed in accordance with the terms hereof shall be canceled and may not be reissued.

	(ii)	*Mechanics of Conversion*.

	(1)	Preferred Stock of the Company to be named “Blank Check Preferred Stock” consists of FORTY MILLION [40,000,000] shares and shall have the following designations, powers, preferences, and other special rights and the following qualifications, limitations, and restrictions:

	(2)	Issuance. The blank check preferred stock may be issued from time to time in one or more series. Subject to the limitations set forth herein and any limitations prescribed by law, the Board of Directors is expressly authorized, prior to the issuance of any series of blank check preferred stock, to fix by resolution, or resolutions, providing for the issue of any series the number of shares included in such series and the designations, relative powers, preferences and rights, and the qualifications, limitations, and restrictions of such series. Pursuant to the foregoing general authority vested in the Board of Directors, but not in the limitations of the powers conferred on the Board of Directors thereby and by the laws of the State of Florida, the Board of Directors is expressly authorized to determine with respect to each series of blank check preferred stock:

	■	The designation or designations of such series and the number of shares (which number from time to time may be decreased by the Board of Directors, but not below the number of shares then outstanding, or may be increased by the Board of Directors unless otherwise provided in creating such series) constituting such series;

	■	The rate or amount and times at which, and the preferences and conditions under which, dividends shall be payable on shares of such series, the status of such dividends as cumulative or noncumulative, the date or dates from which dividends, if cumulative, shall accumulate, and the status of such shares as participating or nonparticipating after the payment of dividends as to which such shares are entitled to any preference;

	■	The rights and preferences, if any, of the holders of shares of such series upon the liquidation, dissolution or winding up of the affairs of, or upon any distribution of the assets of the Corporation, which amount may vary depending upon whether such liquidation, dissolution or winding up is voluntary or involuntary, may vary at different dates, and the status of the shares of such series as participating or nonparticipating after the satisfaction of any such rights and preferences;

	■	The full or limited voting rights, if any, to be provided for shares of such series, in addition to the voting rights applied by law;

	■	The times, terms, and conditions, if any, upon which shares of such series shall be subject to redemption, including the amount the holders of shares of such series shall be entitled to receive upon redemption (which amount may vary under different conditions or at different redemption rates) and the amount, terms, conditions, and manner of operation of any purchase, retirement or sinking fund to be provided for the shares of such series;

	■	The rights, if any, of holders of such series to convert such shares into, or to exchange such shares for, shares of any other class or classes or of any other series of the same class, the prices or rates of conversion or exchange, and adjustments thereto, and any other terms or conditions applicable to such conversion or exchange;

	■	The limitations, if any, applicable while such series is outstanding on the payment of dividends or making of distributions on, or the acquisition or redemption of Common Stock or any other class of shares of such series either as to dividends or upon liquidation, to the shares of such series;

	■	The conditions or restrictions, if any, upon the issue of any additional shares (including additional shares of such series or any other series or of any other class) ranking on a party with or prior to the shares of such series either as to dividends or upon liquidation; and

	■	Any other relative powers, preferences and participating, optional or other specific rights, and the qualification, limitations, or restrictions thereof, of shares of such series; in each case, so far as not inconsistent with the provisions of this Amended and Restated Articles of Incorporation or Florida Statutes as then in effect.

(a)	The authorized number of Directors of the Corporation shall be not less than one [1] nor more than nine [9]. The exact number of Directors may be fixed within the limits specified by resolution adopted by the vote of the majority of Directors in office or by the vote of holders of shares representing a majority of the voting power at any annual meeting, or any special meeting called for such purpose. No reduction of the number of Directors shall have the effect of removing any Director prior to the expiration of his or her term. The exact number of authorized Directors shall be seven [7] until changed as provided in this Article. Director seats may be vacant until filled in accordance with the procedures provided by the Company’s Bylaws, and such vacancies shall never affect the conducting of business.

(b)	All appointments to the Board of Directors shall be for a period of two [2] years. Each Board Director shall be identified by a seat positions. Board seats that are an odd number shall be voted at the annual shareholder meeting in the year ending in an odd number. Board seats with an even number shall be voted at an annual shareholder meeting in the years ending in an even number. The Bylaws may provide for the appointment of a provisional director.

/s/ Toney Jennings		/s/ Mike Hawkins
Toney Jennings		Mike Hawkins
Chief Executive Officer		Chairman of the Board