IIOT-OXYS, Inc 10-K for FY2025
IIOT-OXYS, Inc. (ITOX)
About this 10-K
IIOT-OXYS, Inc filed this 10-K on May 11, 2026, covering the fiscal year ended December 31, 2025 (FY2025).
Headline figures
Fiscal year ended December 31, 2025, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $2500 a year earlier
- Net loss
- $657.85K
- compared with a net loss of $679.74K a year earlier
- Diluted EPS
- $0.00
- compared with $0.00 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the fiscal year ended
For the transition period from __________ to __________
Commission File Number:
| (Exact name of Registrant as specified in its charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| (Address of principal executive offices) | (Zip Code) |
Issuer’s telephone number, including area
code: (
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| N/A | N/A | N/A |
Securities registered pursuant to Section 12(g)
of the Act:
Indicate by check mark if the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐
Indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. (1) Yes ☒ No ☐
(2)
Indicate by check mark whether the registrant
has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant
has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report.
If securities are registered
pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐
No
The aggregate market value of the voting and non-voting
common equity held by non-affiliates of the registrant as of the last business day of its most recently completed second fiscal quarter
based upon the price at which the common equity was last sold was $
As of May 11, 2026, there were shares of the registrant’s Common Stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
TABLE OF CONTENTS
| i |
Forward-Looking Statements
The statements contained in this report that are not historical facts are forward-looking statements that represent management’s beliefs and assumptions based on currently available information. Forward-looking statements include the information concerning possible or assumed future operations, business strategies, need for financing, competitive position, potential growth opportunities, ability to retain and recruit personnel, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believes,” “intends,” “may,” “should,” “anticipates,” “expects,” “could,” “plans,” or comparable terminology or by discussions of strategy or trends. Although we believe that the expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that these expectations will prove to be correct. Such statements by their nature involve risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such forward-looking statements.
Factors that may cause differences between actual results and those contemplated by forward-looking statements are not limited to the following:
| · | geo-political events, government responses to such events and the related impact on the economy both nationally and internationally; | |
| · | general market and economic conditions; | |
| · | our ability to acquire new customers; | |
| · | our ability to maintain and grow our business with our current customers; | |
| · | our ability to meet the volume and service requirements of our customers; | |
| · | industry consolidation, including acquisitions by us or our competitors; | |
| · | capacity utilization and the efficiency of manufacturing operations; | |
| · | success in developing new products; | |
| · | timing of our new product introductions; | |
| · | new product introductions by competitors; | |
| · | the ability of competitors to more fully leverage low cost geographies for manufacturing or distribution; | |
| · | product pricing, including the impact of currency exchange rates; | |
| · | effectiveness of sales and marketing resources and strategies; | |
| · | adequate manufacturing capacity and supply of components and materials; | |
| · | strategic relationships with our suppliers; | |
| · | product quality and performance; | |
| · | protection of our products and brand by effective use of intellectual property laws; | |
| · | the financial strength of our competitors; | |
| · | the outcome of any future litigation or commercial dispute; | |
| · | barriers to entry imposed by competitors with significant market power in new markets; | |
| · | government actions throughout the world; and | |
| · | our ability to service debt, when due. |
Although the forward-looking statements in this Annual Report on Form 10-K (the “Annual Report”) are based on our beliefs, assumptions and expectations, taking into account all information currently available to us, we cannot guarantee future transactions, results, performance, achievements or outcomes. No assurance can be made by anyone that the expectations reflected in our forward-looking statements will be attained, or that deviations from them will not be material and adverse. We undertake no obligation, other than as maybe be required by law, to update this Annual Report or otherwise make public statements updating our forward-looking statements.
Introductory Comment
Unless otherwise indicated, any reference to “the Company”, “our company”, “we”, “us”, or “our” refers to IIOT-OXYS, Inc., a Nevada corporation, and as applicable to its wholly owned subsidiaries, OXYS Corporation, a Nevada corporation, and HereLab, Inc., a Delaware corporation.
| ii |
PART I
| Item 1. | Business. |
Historical Background
We were incorporated in the State of New Jersey on October 1, 2003 under the name of Creative Beauty Supply of New Jersey Corporation, and subsequently changed our name to Gotham Capital Holdings, Inc. on May 18, 2015. We commenced operations in the beauty supply industry as of January 1, 2004. On November 30, 2007, our Board of Directors approved a plan to dispose of our wholesale and retail beauty supply business. From January 1, 2009 until July 28, 2017, we had no operations and were a shell company.
On March 16, 2017, our Board of Directors adopted resolutions, which were approved by shareholders holding a majority of our outstanding shares, to change our name to “IIOT-OXYS, Inc.”, to authorize a change of domicile from New Jersey to Nevada, to authorize a 2017 Stock Awards Plan, and to approve the Securities Exchange Agreement (the “OXYS SEA”) between the Company and OXYS Corporation (“OXYS”), a Nevada corporation incorporated on August 4, 2016.
Under the terms of the OXYS SEA we acquired 100% of the issued voting shares of OXYS in exchange for 34,687,244 shares of our Common Stock. We also cancelled 1,500,000 outstanding shares of our Common Stock and changed our management to Mr. DiBiase who also served in the management of OXYS. Also, one of our principal shareholders entered into a consulting agreement with OXYS to provide consulting services during the transition. The OXYS SEA was effective on July 28, 2017, and our name was changed to “IIOT-OXYS, Inc.” at that time. Effective October 26, 2017, our domicile was changed from New Jersey to Nevada.
At the present time, we have two wholly owned subsidiaries which are OXYS Corporation and HereLab, Inc. (an entity immaterial to our operations), through which our operations are conducted.
General Overview
IIOT-OXYS, Inc., a Nevada corporation (the “Company”), and OXYS, were originally established for the purposes of designing, building, testing, and selling Edge Computing systems for the Industrial Internet. Both companies were, and presently are, early stage technology startups that are largely pre-revenue in their development phase. The Company received its first revenues in the last quarter of 2017, but has had limited ability to grow the company due to limited ability to raise funds.
We develop hardware, software and algorithms that monitor, measure and predict conditions for energy, structural, agricultural and medical applications. We use domain-specific Artificial Intelligence to solve industrial and environmental challenges. Our engineered solutions focus on common sense approaches to machine learning, algorithm development and hardware and software products. We design a system of hardware and software, assemble, install, monitor data and apply our algorithms to help provide the customer insights.
We use off-the-shelf components, with reconfigurable hardware architecture that adapts to a wide range of customer needs and applications. We use open-source software tools, while still creating proprietary content for customers, thereby reducing software development time and cost. The software works with the hardware to collect data from the equipment or structure that is being monitored.
We focus on developing insights. We develop algorithms that help our customers create insights from vast data streams. The data collected is analyzed and reports are created for the customer. From these insights, the customer can act to improve their process, product or structure.
| 1 |
OUR SOLUTIONS ACHIEVE TWO OBJECTIVES
ADD VALUE
| · | We show clear path to improved asset reliability, machine uptime, machine utilization, energy consumption, and quality. | |
| · | We provide advanced algorithms and insights as a service. |
RISK MINIMIZATION
| · | We use simple measurements which are minimally invasive. | |
| · | We do not interfere with command and control of critical equipment. | |
| · | We do not interfere with machine control networks. |
WHAT MARKETS WE SERVE
SMART MANUFACTURING – MEDICAL DEVICES, BIOTECH, AND PHARMACEUTICAL SUPPLY CHAIN
We help our customers maintain machine uptime and maximize operational efficiency. We also enable then to do energy monitoring, predictive maintenance that anticipates problems before they happen, and improve part and process quality. We are on the operations side, not the patient-facing side. In this market vertical, our customers must provide high-quality products that must also pass rigorous review by governing bodies such as the FDA. Here again, we focus on machine uptime, operational efficiency, and predictive maintenance to avoid unplanned downtime.
SMART INFRASTRUCTURE
For bridges and other civil infrastructure, local, state and federal agencies have limited resources. We help our clients prioritize how to spend limited funds by addressing those fixes which need to be made first.
OUR UNIQUE VALUE PROPOSITION
EDGE COMPUTING AS A COMPLIMENT TO CLOUD COMPUTING
Within the Internet of Things (“IoT”) and Industrial Internet of Things (“IIoT”), most companies right now are adopting an approach which sends all sensor data to the cloud for processing. We specialize in edge computing, where the data processing is done locally right where the data is collected. We also have advanced cloud-based algorithms that implement various machine learning and artificial intelligence algorithms.
ADVANCED ALGORITHMS
We have sought to differentiate from our competitors by developing advanced algorithms on our own and in collaboration with strategic partners These algorithms are an essential part of the edge computing strategy that convert raw data into actionable knowledge right where the data is collected without having to send the data to the cloud first.
| 2 |
RECONFIGURABLE HARDWARE AND SOFTWARE
Instead of focusing on creating tools, we use open-source tools to create proprietary content.
Marketing
Our marketing and sales efforts are divided into several distinct categories:
| 1) | We work with partners to leverage their sales and marketing channels. | |
| 2) | Direct business development and discussions with end use customers by company management; and | |
| 3) | Trade shows and international technical, sales and marketing meetings. |
Competition
We have two principal sources of competition. The first comes from large companies such as Siemens, PTC, IBM, GE, Amazon, Google, etc., who all have their efforts in IIoT. However, these large companies are cloud – computing centric and they are trying to move towards edge devices from their present position of being solely cloud computing based. We will be starting in edge computing from day one as opposed to force-fitting a cloud-based solution into the limited computational capability and storage space of an edge device. We believe our systems will be more computationally efficient compared to a cloud-based solution which requires more computational resources.
The second source of competition is from startups who are in the edge computing space. Examples are FogHorn Systems Inc., Tulip Interfaces, and MachineSense. There will be additional startups that will specifically target the edge computing space as investor awareness and the technical focus shifts from cloud computing to edge computing. Whereas other startups focus on the development of proprietary tools for edge computing, our solutions will use open-source tools but will still create proprietary algorithms and software content for clients and customers. We feel this methodology of creating proprietary solutions using open-source tools will allow us to rapidly address current and future customer needs.
Government Regulation
At present, we do not require any governmental approval of any of our products or services.
Environmental Laws
At present, we are not regulated by any environmental laws.
Research and Development
We work with our partners to develop IP.
The efforts in research and development have already resulted in significant customer interest in various market verticals including industrial, automotive, aerospace, agricultural, infrastructure, and power generation.
| 3 |
Employees
As of May 11, 2026, we have one full-time employee, including the CEO.
At the present time, except for the funding received from Cambridge MedSpace LLC (which was exchanged into equity) and from GHS Investments LLC (“GHS”), there are no conflicts of interest between the Company and any of our officers and directors. This was determined as follows: i) none of their outside activities are soliciting business from our customers or business contacts; ii) they are not soliciting our investors to invest in other ventures; and iii) they are not soliciting our contract employees to leave us and join other efforts. At present, all our business services are provided by outside contractors.
| Item 1A. | Risk Factors. |
As a Smaller Reporting Company, we are not required to furnish information under this Item 1A.
| Item 1B. | Unresolved Staff Comments. |
Not applicable.
| Item 1C. | Cybersecurity. |
For purposes of this section:
“Cybersecurity incident” means an unauthorized occurrence, or a series of related unauthorized occurrences, on or conducted through our information systems that jeopardizes the confidentiality, integrity, or availability of our information systems or any information residing therein.
“Cybersecurity threat” means any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.
“Information systems” means electronic information resources, owned or used by us, including physical or virtual infrastructure controlled by such information resources, or components thereof, organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of our information to maintain or support our operations.
We have never had a breach of cyber-security at
any point in our past. The risk to us of cybersecurity threats is in data storage of customer questions and emails.
| 4 |
| Item 2. | Properties. |
We currently do not own any properties.
| Item 3. | Legal Proceedings. |
We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in aggregate, a material adverse effect on our business, financial condition or operating results. From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.
| Item 4. | Mine Safety Disclosures. |
Not Applicable.
| 5 |
PART II
| Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Market Information
Our common stock is quoted on the OTCID under the symbol “ITOX.” The table below sets forth for the periods indicated the quarterly high and low bid prices as reported by OTC Markets. Limited trading volume has occurred during these periods. These quotations reflect inter-dealer prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions.
| FISCAL YEAR ENDING DECEMBER 31, 2026 | Quarter | High | Low | |||||||
| First | $ | 0.0015 | $ | 0.0006 | ||||||
| FISCAL YEAR ENDED DECEMBER 31, 2025 | Quarter | High | Low | |||||||
| First | $ | 0.0013 | $ | 0.0006 | ||||||
| Second | $ | 0.0010 | $ | 0.0006 | ||||||
| Third | $ | 0.0008 | $ | 0.0004 | ||||||
| Fourth | $ | 0.0011 | $ | 0.0005 | ||||||
| FISCAL YEAR ENDED DECEMBER 31, 2024 | Quarter | High | Low | |||||||
| First | $ | 0.0012 | $ | 0.0005 | ||||||
| Second | $ | 0.0015 | $ | 0.0006 | ||||||
| Third | $ | 0.0015 | $ | 0.0008 | ||||||
| Fourth | $ | 0.0013 | $ | 0.0007 | ||||||
Our common stock is considered to be penny stock under rules promulgated by the SEC. Under these rules, broker-dealers participating in transactions in these securities must first deliver a risk disclosure document which describes risks associated with these stocks, broker-dealers’ duties, customers’ rights and remedies, market and other information, and make suitability determinations approving the customers for these stock transactions based on financial situation, investment experience and objectives. Broker-dealers must also disclose these restrictions in writing, provide monthly account statements to customers, and obtain specific written consent of each customer. With these restrictions, the likely effect of designation as a penny stock is to decrease the willingness of broker-dealers to make a market for the stock, to decrease the liquidity of the stock and increase the transaction cost of sales and purchases of these stocks compared to other securities.
Holders
As of the close of business on May 11, 2026, we had approximately 134 holders of our common stock. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies. We have appointed Issuer Direct, 1981 East 4800 South, Suite 100, Salt Lake City, UT 84117, to act as transfer agent for the common stock.
Dividends
We have never declared a cash dividend on our common stock and our Board of Directors does not anticipate that we will pay cash dividends in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will depend upon our financial condition, operating results, capital requirements, restrictions contained in our agreements and other factors which our Board of Directors deems relevant.
We are obligated to pay dividends to certain holders of our preferred stock which we pay out of legally available funds from time to time or reach arrangements with our holders of preferred stock to convert limited quantities of preferred stock at favorable conversion prices in lieu of dividend payments.
| 6 |
Securities Authorized for Issuance under Equity Compensation Plans
As of December 31, 2025, the Company had three equity compensation plans: the 2017 Stock Incentive Plan (the "2017 Plan"), the 2019 Stock Incentive Plan (the "2019 Plan"), and the 2022 Stock Incentive Plan (the "2022 Plan"). Each of the Plans was terminated effective December 31, 2025 pursuant to a resolution of the Board of Directors adopted on April 10, 2026. As of December 31, 2025, there were no securities issuable upon exercise of outstanding options, warrants, or rights under any of the Plans, and no securities remained available for future issuance under the Plans. The Company has no outstanding stock options.
| Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
||||||||||
| (a) | (b) | (c) | |||||||||||
| Equity compensation plans approved by security holders | $ | – | $ | – | $ | – | |||||||
| Equity compensation plans not approved by security holders | – | – | – | ||||||||||
| Total | $ | – | $ | – | – | ||||||||
2017 Stock Incentive Plan
On March 16, 2017, our board of directors assumed the 2017 Stock Awards Plan adopted by the Company while domiciled in New Jersey. No awards were made under this plan. On December 14, 2017, the Board of Directors terminated this plan and adopted a new 2017 Stock Incentive Plan (the “2017 Plan”). The purposes of the 2017 Plan are (a) to enhance our ability to attract and retain the services of qualified employees, officers, directors, consultants, and other service providers upon whose judgment, initiative and efforts the successful conduct and development of our business largely depends, and (b) to provide additional incentives to such persons or entities to devote their utmost effort and skill to the advancement and betterment of our company, by providing them an opportunity to participate in the ownership of our Company and thereby have an interest in the success and increased value of our Company.
There are 4,500,000 shares of common stock authorized for non-qualified and incentive stock options, restricted stock units, restricted stock grants, and stock appreciation rights under the 2017 Plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations.
The 2017 Plan is administered by our board of directors; however, the board of directors may designate administration of the 2017 Plan to a committee consisting of at least two independent directors. Only employees of our Company or of an “Affiliated Company”, as defined in the 2017 Plan, (including members of the board of directors if they are employees of our Company or of an Affiliated Company) are eligible to receive incentive stock options under the Plan. Employees of our Company or of an Affiliated Company, members of the board of directors (whether or not employed by our company or an Affiliated Company), and “Service Providers”, as defined in the 2017 Plan, are eligible to receive non-qualified options, restricted stock units, and stock appreciation rights under the 2017 Plan. All awards are subject to Section 162(m) of the Internal Revenue Code.
Stock Options
We currently have no outstanding stock options.
Recent Sales of Unregistered Securities
During the quarter ended December 31, 2025, there were no unreported unregistered sales of equity securities.
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| Item 6. | [Reserved] |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
This Management’s Discussion and Analysis of Financial Condition and Results of Operations contain certain forward-looking statements. Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events; are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements
Basis of Presentation
The financial information presented below and the following Management Discussion and Analysis of the Consolidated Financial Condition, Results of Operations, Stockholders’ Equity and Cash Flow for the quarterly periods ended September 30, 2025 and 2024 gives effect to our acquisition of OXYS Corporation (“OXYS”) on July 28, 2017. In accordance with the accounting reporting requirements for the recapitalization related to the “reverse merger” of OXYS, the financial statements for OXYS have been adjusted to reflect the change in the shares outstanding and the par value of the common stock of OXYS. Additionally, all intercompany transactions between the Company and OXYS have been eliminated.
Forward-Looking Statements
Statements in this management’s discussion and analysis of financial condition and results of operations contain certain forward-looking statements. To the extent that such statements are not recitations of historical fact, such statements constitute forward looking statements which, by definition, involve risks and uncertainties. Where in any forward-looking statements, if we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will result or be achieved or accomplished.
Factors that may cause differences between actual results and those contemplated by forward-looking statements are not limited to the following:
| · | the impact of conflicts between the Russian Federation and Ukraine and Israel in on our operations; | |
| · | geo-political events, such as the crisis in Ukraine and Israel, government responses to such events and the related impact on the economy both nationally and internationally; | |
| · | general market and economic conditions; | |
| · | our ability to maintain and grow our business with our current customers; | |
| · | our ability to meet the volume and service requirements of our customers; | |
| · | industry consolidation, including acquisitions by us or our competitors; | |
| · | capacity utilization and the efficiency of manufacturing operations; | |
| · | success in developing new products; | |
| · | timing of our new product introductions; | |
| · | new product introductions by competitors; | |
| · | the ability of competitors to more fully leverage low-cost geographies for manufacturing or distribution; | |
| · | product pricing, including the impact of currency exchange rates; |
| 8 |
| · | effectiveness of sales and marketing resources and strategies; | |
| · | adequate manufacturing capacity and supply of components and materials; | |
| · | strategic relationships with our suppliers; | |
| · | product quality and performance; | |
| · | protection of our products and brand by effective use of intellectual property laws; | |
| · | the financial strength of our competitors; | |
| · | the outcome of any future litigation or commercial dispute; | |
| · | barriers to entry imposed by competitors with significant market power in new markets; and | |
| · | government actions throughout the world. |
You should not rely on forward-looking statements in this document. This management’s discussion contains forward looking statements that involve risks and uncertainties. We use words such as “anticipates,” “believes,” “plans,” “expects,” “future,” “intends,” and similar expressions to identify these forward-looking statements. Prospective investors should not place undue reliance on these statements, which apply only as of the date of this document. Our actual results could differ materially from those anticipated in these forward-looking statements.
Critical Accounting Policies
The following discussions are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. These financial statements and accompanying notes have been prepared in accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingencies. We continually evaluate the accounting policies and estimates used to prepare the financial statements. We base our estimates on historical experiences and assumptions believed to be reasonable under current facts and circumstances. Actual amounts and results could differ from these estimates made by management.
We regularly review the carrying value and estimated lives of its long-lived assets to determine whether indicators of impairment may exist that warrant adjustments to the carrying value or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives. Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited and are reviewed when appropriate for possible impairment.
When we issue convertible debt or convertible preferred stock, we first evaluate the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.
Historical Background
We were incorporated in the State of New Jersey on October 1, 2003 under the name of Creative Beauty Supply of New Jersey Corporation and subsequently changed our name to Gotham Capital Holdings, Inc. on May 18, 2015. We commenced operations in the beauty supply industry as of January 1, 2004. On November 30, 2007, our Board of Directors approved a plan to dispose of our wholesale and retail beauty supply business. From January 1, 2009 until July 28, 2017, we had no operations and were a shell company.
| 9 |
On March 16, 2017, our Board of Directors adopted resolutions, which were approved by shareholders holding a majority of our outstanding shares, to change our name to “IIOT-OXYS, Inc.”, to authorize a change of domicile from New Jersey to Nevada, to authorize a 2017 Stock Awards Plan, and to approve the Securities Exchange Agreement (the “OXYS SEA”) between the Company and OXYS Corporation (“OXYS”), a Nevada corporation incorporated on August 4, 2016.
Under the terms of the OXYS SEA we acquired 100% of the issued voting shares of OXYS in exchange for 34,687,244 shares of our Common Stock. We also cancelled 1,500,000 outstanding shares of our Common Stock and changed our management to Mr. DiBiase who also served in the management of OXYS. Also, one of our principal shareholders entered into a consulting agreement with OXYS to provide consulting services during the transition. The OXYS SEA was effective on July 28, 2017, and our name was changed to “IIOT-OXYS, Inc.” at that time. Effective October 26, 2017, our domicile was changed from New Jersey to Nevada.
At the present time, we have two wholly owned subsidiaries which are OXYS Corporation and HereLab, Inc. (an entity immaterial to our operations), through which our operations are conducted.
General Overview
IIOT-OXYS, Inc., a Nevada corporation (the “Company”), and OXYS, were originally established for the purposes of designing, building, testing, and selling Edge Computing systems for the Industrial Internet. Both companies were early-stage technology startups that are largely pre-revenue in their development phase. HereLab (an entity immaterial to our operations) is also an early-stage technology development company.
We develop hardware, software and algorithms that monitor, measure and predict conditions for energy, structural, agricultural and medical applications. We use domain-specific Artificial Intelligence to solve industrial and environmental challenges. Our engineered solutions focus on common sense approaches to machine learning, algorithm development and hardware and software products.
We use off-the-shelf components, with reconfigurable hardware architecture that adapts to a wide range of customer needs and applications. We use open-source software tools, while still creating proprietary content for customers, thereby reducing software development time and cost. The software works with the hardware to collect data from the equipment or structure that is being monitored.
We focus on developing insights. We develop algorithms that help our customers create insights from vast data streams. The data collected is analyzed and reports are created for the customer. From these insights, the customer can act to improve their process, product or structure.
Results of Operations for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
For the year ended December 31, 2025, we earned $0 revenues and recorded related cost of sales of $0. Our operating expenses were $532,791, which included payroll costs of $163,200, amortization of intangible assets of $149,449, legal and professional fees of $153,857, and general and administrative expenses of $66,285. We recorded net other expense of $125,055, consisting of a gain of $40,258 due to change in fair market value of derivative liability, loss on derivatives of $32,203 on Series D Convertible Preferred Stock, gain on extinguishment of debt of $78,884, forgiveness of EIDL loan and other miscellaneous income of $70,958, and interest expense of $282,952. We also recorded $783,414 of preferred stock dividend on convertible preferred stock for the year ended December 31, 2025. As a result, we incurred a net loss attributable to common stockholders of $1,441,260 for the year ended December 31, 2025.
For the year ended December 31, 2024, we earned revenues of $2,500 and recorded related cost of sales of $2,125. Our operating expenses were $428,274, which included payroll costs of $200,000, amortization of intangible assets of $49,636, legal and professional fees of $147,991, and general and administrative expenses of $30,647. We recorded net other expense, of $251,836 consisting of loss of $111,523 due to change in fair market value of derivative liability, , forgiveness of EIDL loan of $34,228, and interest expense of $174,541. We also recorded $84,920 as preferred stock dividend on convertible preferred stock for the year ended December 31, 2024. As a result, we incurred a net loss attributable to common stockholders of $764,655 for the year ended December 31, 2024.
During the current and prior year period, we did not record an income tax benefit due to the uncertainty associated with the Company’s ability to utilize the deferred tax assets.
| 10 |
No revenues were earned in the year 2025 and, thus, revenues were less than those in the same period in 2024. We believe revenue growth for the rest of 2026 will be challenging given the difficulty in raising additional capital to fuel sales and marketing efforts. Potential future revenue growth depends on our ability to raise said capital and the following factors:
| · | Our DOT Bridge Monitoring Contract ended in December 2023 but we believe our Structural Health Monitoring (“SHM”) vertical is the foundation of our future revenue stream. Discussions with our main contractor to the DOT revealed that the monitoring program in which we’ve participated in previous years has been suspended with no foreseeable plans to restart the program. Despite this setback, our main contractor has confirmed we can continue to monitor our two sites (at our cost), which will allow us to effectively market our system and services to local municipalities and other state DOTs. We continue to pursue DOT contacts in two other northeast states, but these may not convert to contracts for another year. Projects with local municipalities in our current northeast state also continue to be prospected and may convert to contracts sometime in 2026, as they are based on potential state grants and not dependent on state or municipal budget cycles. | |
| · | Our Smart Manufacturing vertical is another potential source of future revenue based on the strong use case developed from our CNC POC and SaaS contracts in previous years. Although the SaaS contract ended in May 2024, the tool cost savings exceeded our projections and our customer’s expectations. This previous customer will continue to endorse our capabilities and services, including promotional video material previously released and pending. We believe their endorsement and promotional videos are valuable collateral to prospect future Smart Manufacturing CNC business. Additional POCs for other discrete manufacturing processes, including metal stamping, plastic injection molding, plastic extrusion, and automated assembly and test are also potential avenues of future revenue streams. | |
| · | We believe our strategic partnership continues to be our greatest asset. The strength of our Aingura IIoT, S.L. partnership provides supplemental expertise, equipment and software, which ensures our ability to bring value to our prospective customers. Their recent successes in expanding their minimally invasive monitoring and predictive algorithms into heavy industrial equipment applications bodes well for additional U.S. collaborations with us. |
Despite these positive factors, we continue to face significant headwinds and we have not been able to raise material funds for ongoing operations through our existing financing agreements due to market conditions. Our management continues to secure limited funding from our lead investor to pay for ongoing expenses and our leadership team is considering our options for both the short and long term. Given the current challenges in raising adequate funds, management is pursuing options including vetting suitable companies to merge with or acquire us.
We believe we’ve created valuable assets from our business development in these industries, which are strong in both their size and growth. The global smart manufacturing (also known as Industry 4.0) was 233.3 billion in 2024 and will reach $479 billion by 2029 (CAGR 15.5%)1, and the worldwide SHM industry is $2.5 billion in 2024 and will reach $4.1 billion by 2029 (CAGR of 10.4%)2.
Given the valuable real-world data we have collected, our Artificial Intelligence (“AI”) Machine Learning algorithms we have developed, strong use cases and marketing collateral developed from our data and algorithms, combined with our prudent operational execution, we believe our company’s assets have potential future revenue growth, that will be attractive to prospective partners interested in an acquisition or merger.
On November 5, 2025, control of the Company was transferred to GHS, our lead investor. Vidhydahar Mitta, our independent board member, and Karen McNemar, our interim CFO and COO, resigned from their positions. Cliff Emmons continues in the role of CEO and, together with our new board, we are optimistic that under this new leadership the Company will have greater access to capital to secure additional assets for the Company, including potential synergistic mergers. We expect the net result will result in increased shareholder value.
________________
1 https://www.marketsandmarkets.com/Market-Reports/smart-manufacturing-market-105448439.html
2 https://www.marketsandmarkets.com/Market-Reports/structural-health-monitoring-market-101431220.html
| 11 |
Liquidity and Capital Resources for the Year Ended December 31, 2025 Compared to the Year Ended December 31, 2024
At December 31, 2025, we reported a cash and cash equivalents balance of $26,342 as a result of net increase of $2,749 from $23,593 cash balance at December 31, 2024. This increase in cash and cash equivalents was primarily as a result of net cash used in operating activities of $195,051 offset by net cash provided by sale of Series D convertible preferred stock of $210,000 less cash payments of $12,200 in offering costs.
Operating Activities
Net cash flows used in operating activities for the year ended December 31, 2025 was $195,051, primarily attributed to the net loss of $1,441,260, write-down of intangible assets of $99,949, amortization of intangible assets of $49,500, issuance of common stock for services of $11,760, amortization of debt discount on Series B and D Preferred Stock of $46,800, gain on change in the fair value of derivative liability of $40,258, and net increase in operating assets and liabilities of $1,078,458. The Company recorded changes in operating assets and liabilities, primarily attributable to a decrease in prepaid expenses and other current assets of $2,139, decrease in accounts payable of $125,679, increase in accrued liabilities of $816,103, increase in derivative liabilities of $233,003, decrease in shares payable to related parties of $18,638, and increase in salaries payable to related parties of $171,530 converted into by issuance of Series E Preferred Stock.
Net cash flows used in operating activities for the year ended December 31, 2024 was $46,391, primarily attributed to the net loss of $764,655, amortization of intangible assets of $49,636, loss on change in the fair market value of derivative liabilities of $111,523, and net increase in operating assets and liabilities of $557,105. The Company recorded changes in operating assets and liabilities primarily attributable to a decrease in accounts receivable of $5,460, decrease in prepaid expenses and other current assets of $167, increase in accounts payable of $118,276, increase in accrued liabilities of $159,776, increase in derivative liabilities of $111,612, increase in shares payable to related parties of $3,413, and increase in salaries payable to related parties of $158,402.
Investing Activities
Net cash used in investing activities for the year ended December 31, 2025 and 2024 was $0.
Financing Activities
Net cash provided by financing activities for the year ended December 31, 2025 was $197,800, due to cash received from sale of Series D Convertible Preferred Stock of $210,000 less cash paid for offering costs of $12,200.
Net cash provided by financing activities for the year ended December 31, 2024 was $69,340 due to cash received of $75,600 from equity financing of convertible preferred stock, net of cash payment of $6,260 in commissions and legal fees paid in connection with the capital raise.
As a result of the above activities, the Company recorded an increase in cash and cash equivalents of $2,749 for the year ended December 31, 2025, and an increase in cash and cash equivalents of $22,949 for the year ended December 31, 2024, respectively.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company has suffered continuing operating losses, has a working capital deficit of $2,309,032, net loss incurred for the year ended December 31, 2025 of $1,441,260, net cash used in operating activities of $195,051, and has an accumulated deficit of $12,649,512 as of December 31, 2025. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. If the Company is unable to obtain adequate capital, it could be forced to cease operations. The accompanying consolidated financial statements do not include any adjustments to reflect the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
| 12 |
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on our consolidated financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity capital expenditures or capital resources.
| Item 7A. | Quantitative And Qualitative Disclosures About Market Risk. |
As a Smaller Reporting Company, we are not required to furnish information under this Item 7A.
| Item 8. | Financial Statements. |
The financial statements and supplementary data required by this item are included following the signature page of this Annual Report.
| Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures. |
None.
| Item 9A. | Controls and Procedures. |
Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and, as such, is accumulated and communicated to our Chief Executive Officer, Clifford Emmons, who serves as our principal executive officer and principal financial and accounting officer, respectively, as appropriate, to allow timely decisions regarding required disclosure. Mr. Emmons evaluated the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) of the Exchange Act, as of December 31, 2025. Based on his evaluation, Mr. Emmons concluded that, due to a material weakness in our internal control over financial reporting as described below, our disclosure controls and procedures were not effective as of December 31, 2025. In light of the material weakness in internal control over financial reporting, we completed substantive procedures, including validating the completeness and accuracy of the underlying data used for accounting prior to filing this Annual Report.
These additional procedures have allowed us to conclude that, notwithstanding the material weakness in our internal control over financial reporting, the consolidated financial statements included in this report fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.
Management Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
| 13 |
Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2025, based upon Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).
During its evaluation, management noted certain matters involving internal control and its operation that we consider to be significant deficiencies or material weaknesses under standards of the Public Company Accounting Oversight Board (“PCAOB”). A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.
We noted deficiencies involving lack of segregation of duties, lack of governance/oversight, and lack of internal control documentation that we believe to be material weaknesses.
Because of this material weaknesses, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2025, based on criteria described in Internal Control – Integrated Framework (2013) issued by COSO.
Remediation of the Material Weakness
We are evaluating the material weaknesses and developing a plan of remediation to strengthen our overall internal control over financial reporting. The remediation plan will include the creation and adoption of a formal policy manual specifically dealing with segregation of duties, implementation of internal controls and corporate governance surrounding financial controls.
Due to a material weakness as disclosed in the 2024 Annual Report on Form 10-K, we committed to the same remediation plan, as disclosed above; however, due to lack of resources, we were unable to execute the contemplated remediation plan. If we are unable to increase our workforce, we may never be able to implement the remediation plan proposed above.
We are committed to maintaining a strong internal control environment and we believe that these remediation efforts will represent significant improvements in our controls. We have started to implement these steps, as disclosed above; however, some of these steps will take time to be fully integrated and confirmed to be effective and sustainable. Additional controls may also be required over time. Until the remediation steps set forth above are fully implemented and tested, the material weakness described above will continue to exist.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting, as defined in Rules 13a-15(f) of the Exchange Act, during our most recent fiscal quarter ended December 31, 2025, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
| Item 9B. | Other Information. |
During the quarter ended December 31, 2025, no
director or officer
| Item 9C. | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. |
Not applicable to the Company.
| 14 |
PART III
| Item 10. | Directors, Executive Officers and Corporate Governance. |
Current Management
The following table sets forth information concerning our directors and executive officers:
| Name | Position | Age | ||
| Executive Officers: | ||||
| Clifford L. Emmons | Chief Executive Officer, President, Interim Chief Technical Officer | 64 | ||
| Directors: | ||||
| Clifford L. Emmons | Director | 64 | ||
| Mark Grober | Director | 41 | ||
| Sarfraz Hajee | Director | 41 | ||
| Matthew Schissler | Director | 54 |
Directors are elected to serve until the next annual meeting of stockholders and until their successors are elected and qualified. Directors are elected by a plurality of the votes cast at the annual meeting of stockholders and hold office until the expiration of the term for which he or she was elected and until a successor has been elected and qualified.
A majority of the authorized number of directors constitutes a quorum of the Board of Directors for the transaction of business. The directors must be present at the meeting to constitute a quorum. However, any action required or permitted to be taken by the Board of Directors may be taken without a meeting if all members of the Board of Directors individually or collectively consent in writing to the action.
Business Experience of Executive Officers and Directors
The principal occupation and business experience during the past five years for our executive officers and directors is as follows:
Clifford L. Emmons: Mr. Emmons has served as our Chief Executive Officer, President, and director since June 4, 2018. From 1995 to 2017, Mr. Emmons worked for Medtronic, a global leader in medical technology, services, and solutions, where he served in various capacities including several Vice President and Director positions. Mr. Emmons is also the founder of AHI, LLC, a consultancy firm. Mr. Emmons received an Executive Certificate in Strategy & Innovation from MIT, a Masters of Science in Management Engineering from the University of Bridgeport, a Bachelor of Science in Electrical Engineering from the University of New Haven, and a Bachelor of Science in Mechanical Engineering from the University of Connecticut.
Mark Grober: Mr. Grober has served as a director since November 5, 2025. Over the past five years, Mark Grober’s principal occupation has been serving as Founder and Member of GHS Investments, LLC. GHS Investments, LLC is not a parent, subsidiary, or affiliate of the Company. Mr. Grober brings over 17 years of experience in PIPE (Private Investment in Public Equity) transactions and has co-founded multiple investment funds and managed portfolios for a boutique family of funds. Before joining the family of funds in 2009, he worked as an analyst for an $800 million hedge fund based in Long Island, New York, where he oversaw fifty-five portfolio companies with a focus on private equity financing. Mr. Grober holds a Bachelor of Arts in Finance from the State University of New York at Binghamton.
Sarfraz Hajee: Mr. Hajee has served as a director since November 5, 2025. Over the past five years, Sarfraz Hajee’s principal occupation has been serving as a Founder and Member of GHS Investments, LLC. GHS Investments, LLC is not a parent, subsidiary, or affiliate of the Company. Mr. Hajee has been investing in publicly traded companies since 2011 and has co-founded and managed multiple private investment funds. In addition, he has experience developing and advising private businesses across a broad range of industries. Prior to his transition into finance, Mr. Hajee worked for a New York State agency, a class action administration firm, and an information technology company. Mr. Hajee received his Juris Doctor (J.D.) from Boston University and earned his Bachelor’s degree in Philosophy, Politics, and Law from the State University of New York at Binghamton.
| 15 |
Matthew Schissler: Mr. Schissler has served as a director since November 5, 2025. Over the past five years, Matthew Schissler’s principal occupation has been serving as Founder and Member of GHS Investments, LLC. GHS Investments, LLC is not a parent, subsidiary, or affiliate of the Company. Mr. Schissler is a business executive with over 25 years of experience serving in leadership roles in both privately and publicly held companies. He is most notable for having founded and managed Cord Blood America, Inc. (CBAI), a company specializing in the harvesting and storage of umbilical stem cells in the United States and internationally. He has also managed private investment funds focused on companies exhibiting significant growth potential and has served on boards of directors and advisory boards across various industries. Mr. Schissler has previously served as Chairman of the Nevada Development Authority Biotech Committees and as a board member of the Las Vegas Natural History Museum. He holds a Bachelor of Arts in Biology from St. Mary’s College of Maryland.
Legal Proceedings
Except as set forth below, during the past ten years there have been no events under any bankruptcy act, no criminal proceedings, and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors or executive officers.
On August 19, 2024, the SEC entered a cease-and-desist order (File No. 3-22020; Release No. 34-100769) against directors Mark S. Grober, Sarfraz S. Hajee, and Matthew L. Schissler, finding that each caused violations of Section 15(a)(1) of the Securities Exchange Act of 1934 in connection with the operation of GHS as an unregistered securities dealer. The matter was resolved by settlement.
Family Relationships
There are no family relationships between any of our directors and executive officers.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.”
We currently have not established any committees of the Board of Directors. Our Board of Directors may designate from among its members an executive committee and one or more other committees in the future. We do not have a nominating committee or a nominating committee charter. Further, we do not have a policy with regard to the consideration of any director candidates recommended by security holders. To date, other than as described above, no security holders have made any such recommendations. The entire Board of Directors performs all functions that would otherwise be performed by committees. Given the present size of our board it is not practical for us to have committees. If we are able to grow our business and increase our operations, we intend to expand the size of our board and allocate responsibilities accordingly.
Delinquent Section 16(a) Reports
Under U.S. securities laws, directors, certain officers and persons holding more than 10% of our common stock must report their initial ownership of our common stock and any changes in their ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this Annual Report those people who did not file these reports when due. Based solely on our review of copies of the reports filed with the SEC, we believe that all reporting requirements for fiscal year 2025 were complied with by each person who at any time during the 2025 fiscal year was a director or an executive officer or held more than 10% of our common stock, except as follows:
Each of Mark Grober, Sarfraz Hajee, and Matthew Schissler filed one late Form 3 reporting initial ownership. Each such Form 3 was due on November 15, 2025 and was filed on February 5, 2026.
Each of Clifford L. Emmons, Karen McNemar, and Vidhyadhar Mitta had a Form 4 filing obligation triggered on November 5, 2025 that was not filed timely; however, each such Form 4 has since been filed.
| 16 |
Code of Ethics
On March 9, 2018, the Board of Directors adopted a Code of Ethics (the “Code”). The purpose of the Code of Ethics is to deter wrongdoing and to promote:
| · | honest and ethical conduct; | |
| · | full, fair, accurate, timely, and understandable disclosure in reports and documents that a registrant files with, or submits to, the SEC and in other public communications made by the Company; | |
| · | avoidance and ethical handling of actual or apparent conflicts of interest, including disclosure to an appropriate person of any material transaction or relationship that reasonably could be expected to give rise to such a conflict; | |
| · | confidentiality of corporate information; | |
| · | protection and proper use of corporate assets and opportunities; | |
| · | compliance with applicable governmental laws, rules, and regulations; | |
| · | prompt internal reporting of any violations of this Code to an appropriate person; and | |
| · | accountability for adherence to the Code. |
The Code of Ethics applies to all directors, officers, and employees of the Company and its subsidiaries, including, but not limited to, the Company’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Ethics is available at www.oxyscorp.com and is included as an exhibit to this Annual Report. The Company will provide any person, without charge and upon request through our website, a copy of the Code of Ethics.
| Item 11. | Executive Compensation. |
The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the following named executive officers for all services rendered in all capacities to our company and its subsidiaries for the years ended December 31, 2025 and 2024.
Summary Compensation Table
| Salary | Stock Awards | Other Compensation | Total | |||||||||||||||||||||||||
| Name and Principal Position | Year | $ | Footnote | $ | Footnote | $ | Footnote | $ | ||||||||||||||||||||
| Clifford Emmons (Current CEO and Former Interim CTO) | 2025 | $ | 83,333 | 1 | $ | 1,864 | 2 | $ | 8,333 | 3 | $ | 93,530 | ||||||||||||||||
| 2024 | $ | 100,000 | 4 | $ | 1,706 | 5 | $ | – | $ | 101,706 | ||||||||||||||||||
| Karen McNemar (Former Interim CFO) | 2025 | $ | 83,333 | 6 | $ | 1,864 | 7 | $ | 7,075 | 8 | $ | 92,272 | ||||||||||||||||
| 2024 | $ | 100,000 | 9 | $ | 1,706 | 10 | $ | – | – | $ | 101,706 | |||||||||||||||||
________________
| (1) | Annual salary of $100,00 through 10/30/25. |
| (2) | As of December 31, 2025, Mr. Emmons earned 2,367,123 shares of common stock valued at $1,864. |
| (3) | Consulting fees for Cliff Emmons $8,333. To be paid in Series E Preferred Shares. |
| (4) | As of December 31, 2024, Mr. Emmons was owed $289,646 in accrued and unpaid consulting fees and $12,000 in reimbursable expenses. |
| (5) | As of December 31, 2024, Mr. Emmons earned 2,257,534 shares of common stock valued at $1,706. |
| (6) | Annual salary of $100,000 through 10/30/25. |
| (7) | As of December 31, 2025, Ms. McNemar earned 2,367,123 shares of common stock valued at $1,864. |
| (8) | Consulting fees paid to Karen McNemar $7,075. |
| (9) | As of December 31, 2024, Ms. McNemar was owed $262,935 in accrued and unpaid consulting fees and $1,600 in reimbursable expenses. |
| (10) | As of December 31, 2024, Mc. McNemar earned 2,257,534 shares of common stock valued at $1,706. |
| 17 |
Emmons Employment Contracts and Consulting Agreement
On June 2, 2022, the Board of Directors (with Mr. Emmons abstaining) approved the Employment Contract dated effective April 1, 2022 with Mr. Emmons (the “Emmons Contract”). The term of the Emmons Contract is from the effective date until the Emmons Contract is terminated pursuant to its terms. The services to be provided by Mr. Emmons pursuant to the Emmons Contract are customary for the positions in which he is serving.
Pursuant to the Emmons Contract, Mr. Emmons shall receive an annual salary of $100,000 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the Emmons Contract. If the Company reaches $1,000,000 in cumulative sales over a 12-month period, the annual salary will increase to $150,000, commencing the following month. If the Company reaches $5,000,000 in cumulative sales over a 12-month period, the annual salary will increase to $200,000 commencing the following month.
As of the effective date, the Company will award to Mr. Emmons an aggregate of 7,000,000 shares of the Company’s Common Stock which will vest as follows (the “Emmons Contract Shares”):
| 1. | 1,500,000 shares on the first-year anniversary of the effective date; | |
| 2. | 2,500,000 shares on the second-year anniversary of the effective date; and | |
| 3. | 3,000,000 shares on the third-year anniversary of the effective date. |
The Emmons Contract Shares are awarded under the 2022 Plan. Vesting of the Emmons Contract Shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the Emmons Contract) or the listing of the Company’s Common Stock on a senior exchange.
On October 30, 2025, the Company entered into a Consulting Agreement with Mr. Emmons pursuant to which Mr. Emmons will receive a monthly fee of $4,166.66 payable in Series E Preferred Stock issuable no later than 15 days following the end of the month. The term of the Consulting Agreement is three months which is automatically renewable upon the consent of the parties for additional one-month terms.
McNemar Employment Contract
On June 2, 2022, the Board of Directors of Company approved the Employment Contract dated effective April 1, 2022 with Ms. McNemar (the “McNemar Contract”). The term of the McNemar Contract is from the effective date until the McNemar Contract is terminated pursuant to its terms. The services to be provided by Ms. McNemar pursuant to the McNemar Contract are those customary for the positions in which she is serving.
Pursuant to the McNemar Contract, Ms. McNemar shall receive an annual salary of $100,000 which accrues unless converted into shares of Common Stock of the Company at a conversion rate specified in the McNemar Contract. If the Company reaches $1,000,000 in cumulative sales over a 12-month period, the annual salary will increase to $150,000, commencing the following month. If the Company reaches $5,000,000 in cumulative sales over a 12-month period, the annual salary will increase to $200,000, commencing the following month.
As of the effective date, the Company will award to Ms. McNemar an aggregate of 7,000,000 shares of the Company’s Common Stock which will vest as follows (the “McNemar Contract Shares”):
| 1. | 1,500,000 shares on the first-year anniversary of the effective date; | |
| 2. | 2,500,000 shares on the second-year anniversary of the effective date; and | |
| 3. | 3,000,000 shares on the third-year anniversary of the effective date. |
| 18 |
The McNemar Contract Shares are awarded under the 2022 Plan. Vesting of the McNemar Contract Shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the McNemar Contract) or the listing of the Company’s Common Stock on a senior exchange.
On November 5, 2025, concurrent with her resignation from all positions within the Company, the McNemar Contract was terminated. A new consulting agreement was entered into.
Equity Awards
The following table provides information on stock and option awards held by the named executive officers as of December 31, 2025:
| Stock Awards | Market Value of | |||||||||
| Number of Shares | Shares of Units of | |||||||||
| or Units of Stock that | Stock that Have Not | |||||||||
| Grant | Have Not Vested | Vested | ||||||||
| Name | Date | (#) | ($) | |||||||
| Clifford L. Emmons | NA | 0 | – | |||||||
Compensation of Directors
Besides Mr. Emmons’ compensation (whose compensation is disclosed above), no compensation was awarded to, earned by, or paid to any remaining directors for services rendered in all capacities to our Company and its subsidiaries for the year ended December 31, 2025.
Insider Trading Policy
Policies and Practices Related to the Timing of Grants of Certain Equity Awards
It is management’s duty to approve ordinary
course annual equity grants during a scheduled meeting held each year. At this meeting, management is to approve each named executive
officer’s annual equity award, if any. At this time, we do not currently anticipate granting stock options to any of our named executive
officers.
| Item 12. | Security Ownership of Certain Beneficial Owners and Management. |
The following table and footnotes thereto set forth information regarding the number of shares of common stock beneficially owned by (i) each director and named executive officer of our company, (ii) each person known by us to be the beneficial owner of 5% or more of its issued and outstanding shares of common stock, and (iii) named executive officers, executive officers, and directors of the Company as a group as of May 11, 2026. In calculating any percentage in the following table of common stock beneficially owned by one or more persons named therein, the following table assumes 586,385,063 shares of common stock outstanding. Unless otherwise further indicated in the following table, the footnotes thereto and/or elsewhere in this Annual Report, the persons and entities named in the following table have sole voting and sole investment power with respect to the shares set forth opposite the shareholder’s name, subject to community property laws, where applicable. Unless otherwise indicated in the following table and/or the footnotes thereto, the address of our named executive officers and directors in the following tables is: 705 Cambridge Street, Cambridge, MA 02141.
| 19 |
| Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership(1) |
Percent of Class (1) |
||||||
| Named Executive Officers and Directors | ||||||||
| Clifford Emmons | 29,260,614 | (2) | 4.99% | |||||
| Karen McNemar | 29,260,614 | (3) | 4.99% | |||||
| Sarfraz Hajee | 29,260,614 | (4) | 4.99% | |||||
| Mark Grober | 29,260,614 | (5) | 4.99% | |||||
| Matthew Schissler | 29,260,614 | (6) | 4.99% | |||||
| Executive Officers, Named Executive Officers, and Directors as a Group (5 Persons) | 87,781,842 | |||||||
________________
| (1) | Under Rule 13d-3 of the Exchange Act, a beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the number of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in the above table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on April 15, 2026. |
| (2) | Includes 19,980,614 shares issuable upon the conversion of shares of Series C Preferred Stock (subject to 4.99% beneficial ownership limitation) owned by Mr. Emmons. Includes 19,980,614 shares issuable upon the conversion of shares of Series E Preferred Stock (subject to 4.99% beneficial ownership limitation) owned by Mr. Emmons. |
| (3) | Includes 20,456,114 shares issuable upon the conversion of shares of Series E Preferred Stock (subject to 4.99% beneficial ownership limitation) owned by Ms. McNemar. |
| (4) | Includes 29,260,614 shares issuable upon the conversion of shares of Series A, B, and D Preferred Stock (subject to 4.99% beneficial ownership limitation) beneficially owned by Mr. Hajee. The shares are owned by GHS Investments, LLC. |
| (5) | Includes 29,260,614 shares issuable upon the conversion of shares of Series A, B, and D Preferred Stock (subject to 4.99% beneficial ownership limitation) beneficially owned by Mr. Grober. The shares are owned by GHS Investments, LLC. |
| (6) | Includes 29,260,614 shares issuable upon the conversion of shares of Series A, B, and D Preferred Stock (subject to 4.99% beneficial ownership limitation) beneficially owned by Mr. Schissler. The shares are owned by GHS Investments, LLC. |
| 20 |
The following table sets forth information known to us regarding the beneficial ownership of our Series A Supervoting Preferred Stock as of May 11, 2026.
| Title of Class |
Name and address of beneficial owner |
Amount and nature of beneficial ownership |
Percent of Class | |||
| Series A Supervoting Preferred Stock | GHS Investments, LLC | 100 | 100% |
The following table sets forth information known to us regarding the beneficial ownership of our Series B Convertible Preferred Stock as of May 11, 2026.
| Title of Class |
Name and address of beneficial owner (1) |
Amount and nature of beneficial ownership |
Percent of Class | |||
| Series B Convertible Preferred Stock | GHS Investments, LLC | 583 | 100% |
The following table sets forth information known to us regarding the beneficial ownership of our Series C Convertible Preferred Stock as of May 11, 2026.
| Title of Class |
Name and address of beneficial owner (1) |
Amount and nature of beneficial ownership |
Percent of Class | |||
| Series C Convertible Preferred Stock | Clifford L. Emmons | 20 | 35.09% | |||
| Vivek Dave | 16 | 28.07% | ||||
| Giro DiBiase | 21 | 36.84% |
The following table sets forth information known to us regarding the beneficial ownership of our Series D Convertible Preferred Stock as of May 11, 2026.
| Title of Class |
Name and address of beneficial owner (1) |
Amount and nature of beneficial ownership |
Percent of Class | |||
| Series D Convertible Preferred Stock | GHS Investments, LLC | 253 | 100% |
The following table sets forth information known to us regarding the beneficial ownership of our Series D Convertible Preferred Stock as of May 11, 2026.
| Title of Class |
Name and address of beneficial owner (1) |
Amount and nature of beneficial ownership |
Percent of Class | |||
| Series E Convertible Preferred Stock | Clifford L. Emmons | 269 | 22.36% | |||
| Karen McNemar | 269 | 22.36% | ||||
| Vidhyadhar Mitta | 180 | 14.96% | ||||
| Sergey Gogin | 489 | 40.65% |
| 21 |
| Item 13. | Certain Relationships and Related Transactions, and Director Independence. |
Certain Relationships and Related Transactions
For transactions with our executive officers, please see the disclosure under “Item 11. Executive Compensation.” above.
Cambridge MedSpace Note
On January 22, 2019, we entered into a Securities Purchase Agreement with Cambridge MedSpace, LLC, a Massachusetts limited liability company of which our Chief Executive Officer and director, Clifford L. Emmons shares ownership, for the purchase of a 5% Secured Convertible Note in the principal amount of $55,000. The note was convertible, in whole or in part, into shares of our Common Stock, at any time at a rate of $0.65 per share with fractions rounded up to the nearest whole share, unless paid in cash at our election. The note bore interest at a rate of 5% per annum and interest payments were to be made on an annual basis. The original maturity date of the note was January 22, 2020. The note was governed by the Securities Purchase Agreement and was secured by all our assets (but is not a senior secured note) pursuant to the Security Agreement. In addition to the issuance of the note, we issued Cambridge MedSpace warrants to purchase one share of our Common Stock for 50% of the number of shares of Common Stock issuable upon conversion of the note. Each warrant was originally immediately exercisable at $0.75 per share and expired on January 22, 2024.
On June 12, 2020, the Company entered into Amendment No. 1 to the note with Cambridge MedSpace pursuant to which the note was amended to extend the maturity date to March 1, 2021.
On April 6, 2022, the Company entered into Amendment No. 2 to the note with Cambridge MedSpace pursuant to which the maturity date as extended to March 1, 2024.
Debt Exchange Agreement
On February 5, 2024 we entered into the Debt Exchange Agreement with Cambridge MedSpace. Under the agreement, we agreed to issue to the Lender 57 shares of Series C Preferred Stock in exchange for the forgiveness of $55,000 of principal and $13,825 of accrued and unpaid interest.
Mitta Note
On August 2, 2019, we entered into a Securities Purchase Agreement with Vidhyadhar Mitta, a director of the Company, for the purchase of a 12% Secured Convertible Note in the principal amount of up to $125,000 (the “Mitta Note”). The note was originally convertible, in whole or in part, into shares of our Common Stock, at any time at a rate of $0.08 per share with fractions rounded up to the nearest whole share, unless paid in cash at our election. The note bears interest at a rate of 12% per annum and interest payments were originally to be made on a quarterly basis. The note originally matured August 2, 2021. On August 2, 2019, the first closing of the note occurred pursuant to which we received $75,000. On September 6, 2019, the second closing occurred pursuant to which the Company received $25,000. On October 16, 2019, the third closing occurred pursuant to which the Company received $25,000.
The note is governed by the SPA and is secured by all the assets of the Company (but is not a senior secured note) pursuant to the Security Agreement. In addition to the issuance of the note, we issued to the Mr. Mitta warrants to purchase one share our Common Stock for 50% of the number of shares of Common Stock issuable upon conversion of the funds received. Each warrant was originally immediately exercisable at $0.12 per share and expires on August 2, 2024.
| 22 |
On August 2, 2021, the Company entered into Amendment No. 1 to the note with Vidhyadhar Mitta pursuant to which the note was amended to extend the maturity date to August 2, 2022.
Effective August 2, 2022, the Company entered into Amendment No. 2 to the note with Vidhyadhar Mitta pursuant to which the note was amended to extend the maturity date to August 2, 2024.
Effective August 2, 2024, the Company entered into Amendment No. 3 to the note with Vidhyadhar Mitta pursuant to which the note was amended to extend the maturity date to August 2, 2025.
On August 6, 2025, the Company entered into an amendment dated effective August 2, 2025 to the Note extending the maturity date to February 2, 2026.
Upon Closing (as defined below), the Mitta Note was cancelled and the Security Agreement effective as of August 2, 2019 between Mr. Mitta and the Company was terminated.
GHS Investments, LLC
GHS Investments, LLC is owned and controlled by Mark S. Grober, Sarfraz S. Hajee, and Matthew L. Schissler, each of whom has served as a director of the Company since November 5, 2025.
Outstanding Preferred Stock Holdings
As of December 31, 2025, GHS held the following securities of the Company: (i) 100 shares of Series A Supervoting Preferred Stock (100% of class); (ii) 583 shares of Series B Convertible Preferred Stock (100% of class); and (iii) 210 shares of Series D Convertible Preferred Stock (100% of class). The Series B and Series D Preferred Stock were originally issued to GHS pursuant to securities purchase agreements entered into prior to the appointment of Messrs. Grober, Hajee, and Schissler as directors.
Preferred Equity Financing with GHS Investments, LLC
On March 21, 2025, the Company entered into a Securities Purchase Agreement with GHS in the amount of up to $210,000 (the “SPA”). The SPA provides for GHS’s purchase, from time to time, of up to 210 shares of the Company’s newly-designated Series D Convertible Preferred Stock (the “Series D Preferred Stock”). The initial closing under the SPA consisted of 60 shares of Preferred Stock, stated value $1,200 per share, issued to GHS for an initial purchase price of $60,000, or $1,000 per share. At GHS and the Company’s option, and subject to the terms of the SPA and the Certificate of Designation for the Preferred Stock, additional closings in the aggregate amount of up to 150 shares of Preferred Stock for a total aggregate purchase price of up to $150,000 may take place. From March 21, 2025 until present, GHS has purchased 210 shares pursuant to the SPA.
Reorganization
GHS SPA
On October 30, 2025, we entered into a Stock Purchase Agreement (the “SPA”) with GHS, an entity which is owned and controlled by Messrs. Hajee, Grober, and Schissler who serve as directors, pursuant to which, upon the occurrence of certain conditions, including defaults by the Company under its agreements with GHS and subsequent waivers and extensions thereof by GHS, the Company would issue to GHS 100 shares (the “GHS Shares”) of the Company’s Series A Supervoting Preferred Stock (the “Series A Preferred Stock”).
On November 5, 2025 (the “Closing” or, the “Closing Date”), the closing of the SPA occurred, and GHS was issued 100 shares of Series A Preferred Stock.
| 23 |
Emmons Exchange Agreement
On October 30, 2025, the Company entered into a Debt Exchange Agreement (the “Emmons DEA”) with Clifford L. Emmons, it’s Chief Executive Officer and Director. Pursuant to the Emmons DEA, Mr. Emmons exchanged $387,242 of accrued and unpaid fees owed to him by the Company under various agreements for 268.529 shares (the “Emmons Shares”) of the Company’s Series E Convertible Preferred Stock (the “Series E Preferred Stock”). In addition to the issuance of the Emmons Shares, Mr. Emmons agreed to cancel 7,800 shares of Series A Preferred Stock owned by him. The closing of the Emmons DEA occurred on November 5, 2025.
Mitta Exchange Agreement
On October 30, 2025, the Company entered into a Debt Exchange Agreement (the “Mitta DEA”) with Vidhyadhar Mitta, it’s former Director. Pursuant to the Mitta DEA, Mr. Mitta exchanged $216,156 of principal and accrued and unpaid interest owed to him by the Company under the 12% Secured Convertible Promissory Note issued to Mr. Mitta on August 2, 2019 (the “Mitta Note”) for 180 shares (the “Mitta Shares”) of Series E Preferred Stock. In addition to the issuance of the Mitta Shares, Mr. Mitta agreed to cancel 12,000 shares of Series A Preferred Stock owned by him. The closing of the Mitta DEA occurred on November 5, 2025.
McNemar Exchange Agreement
On October 30, 2025, the Company entered into a Debt Exchange Agreement (the “McNemar DEA”) with Karen McNemar, it’s former Chief Financial Officer. Pursuant to the McNemar DEA, Ms. McNemar exchanged $323,269 of accrued and unpaid fees owed to her by the Company under various agreements for 269 shares (the “McNemar Shares”) of Series E Preferred Stock. In addition to the issuance of the McNemar Shares, Ms. McNemar agreed to cancel 6,045 shares of Series A Preferred Stock owned by her. The closing of the McNemar DEA occurred on November 5, 2025.
Upon Closing, all previous agreements between Ms. McNemar and Mr. Emmons (besides the Consulting Agreement) and the Company were terminated. Ms. McNemar has also entered into a new consulting agreement with the Company.
Director Independence
We are not currently subject to listing requirements of any national securities exchange or inter-dealer quotation system which has requirements that a majority of the board of directors be “independent” and, as a result, we are not at this time required to have our Board of Directors comprised of a majority of “independent directors.” Although we have not adopted the independence standards any national securities exchange to determine the independence of directors, the NYSE MKT LLC provides that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of our board of directors, free of any relationship that would interfere with the exercise of independent judgment. Under this standard, our board of directors has determined that Mr. Mitta would meet this standard, and therefore, would be considered to be independent.
| Item 14. | Principal Accountant Fees and Services. |
Fees Paid
Audit Fees
The aggregate fees billed for professional services rendered by our principal accountants for the audit of our annual financial statements, review of financial statements included in the quarterly reports and other fees that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for the year ended December 31, 2025 were $55,065 and $49,000 for the period ended December 31, 2024, respectively.
| 24 |
Audit-Related Fees
There were no fees billed for assurance and related services by our principal accountants that are reasonably related to the performance of the audit or review of the financial statements, other than those reported above, for the years ended December 31, 2025 and 2024, respectively.
Tax Fees
The aggregate fees billed for professional services rendered by our principal accountants for tax compliance, tax advice and tax planning in the years ended December 31, 2025 were $0 and $0 in 2024, respectively.
All Other Fees
There were no other fees billed for products or services provided by the principal accountants, other than those previously reported above, for the years ended December 31, 2025 and 2024, respectively.
Audit Committee
We do not have an Audit Committee; therefore, the Board of Directors has considered whether the non-audit services provided by our auditors are compatible with maintaining the independence of our auditors and concluded that the independence of our auditors is not compromised by the provision of such services. Our Board of Directors pre-approves all auditing services and permitted non-audit services, including the fees and terms of those services, to be performed for us by our independent auditor prior to engagement.
| 25 |
PART IV
| Item 15. | Exhibits, Financial Statement Schedules. |
Financial Statements
The following financial statements are filed with this Annual Report:
Exhibits
The following exhibits are included with this Annual Report:
Incorporated by Reference
| 26 |
| 27 |
_________________
*Management contract or compensatory plan or arrangement.
+Furnished not filed.
| Item 16. | Form 10-K Summary. |
None.
| 28 |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| IIOT-OXYS, INC. | ||
| Date: May 11, 2026 | By: | /s/ Clifford L. Emmons |
| Clifford L. Emmons, Chief Executive Officer | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.
| NAME | TITLE | DATE | ||
|
/s/ Clifford L. Emmons Clifford L. Emmons |
Director and Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
May 11, 2026 | ||
|
/s/ Sarfraz Hajee Sarfraz Hajee |
Director | May 11, 2026 | ||
| /s/ Mark Grober | Director | May 11, 2026 | ||
| Mark Grober | ||||
| /s/ Matthew Schissler | Director | May 11, 2026 | ||
| Matthew Schissler |
| 29 |
INDEX TO FINANCIAL STATEMENTS
| 30 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of IIOT-OXYS, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of IIOT-OXYS, Inc. (“the Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2025, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024 and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has had recurring net losses, a significant working capital deficit, and negative cash flows from operations. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
| F-1 |
Complex Equity Transactions
As discussed in Note 5 and Note 8, the Company has outstanding Series B, Series C, and Series D, Convertible Preferred Stock that is required to be analyzed pursuant to ASC 815, Derivatives and Hedging. Management uses an option pricing model to evaluate the fair value of its derivative liabilities, which requires management to make assumptions related to fair value measurements. Calculations and accounting for these features require management’s judgments related to initial and subsequent recognition of the debt and related features, use of a valuation model, and value of the inputs used in the selected valuation model.
How We Addressed the Matter
Our audit procedures related to the evaluation of the Company’s accounting for these instruments included the following, among others:
| o | We obtained an understanding of management’s process and methodology. |
| o | We independently evaluated the inputs utilized by management in order to determine the relevance and reliability of data used. |
| o | We evaluated the underlying contracts and agreements and recalculated the fair value of derivative liabilities and related disclosures. |
We have served as the Company’s auditor since 2024.
May 11, 2026
| F-2 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
IIOT-OXYS, Inc. and Subsidiaries
Consolidated Balance Sheets
| December 31, 2025 | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total Current Assets | ||||||||
| Intangible assets, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued liabilities | ||||||||
| Deferred revenue | ||||||||
| Notes payable - current | ||||||||
| Shares payable to related parties | ||||||||
| Salaries payable to related parties | ||||||||
| Derivative liabilities | ||||||||
| Total Current Liabilities | ||||||||
| Notes payable, net of current | ||||||||
| Due to stockholders | ||||||||
| Total Liabilities | ||||||||
| Commitments and Contingencies (Note 4) | ||||||||
| Series B Convertible Preferred Stock,
shares designated, $
Par Value, $ | ||||||||
| Series C Convertible Preferred Stock,
shares designated, $
Par Value, $ | ||||||||
| Series D Convertible Preferred Stock, shares designated, $ Par Value, $ | ||||||||
| Stockholders' Equity (Deficit) | ||||||||
| Preferred Stock, $ par value, Shares authorized | ||||||||
| Series A Preferred Stock, shares and shares issued and outstanding at December 31, 2025 and 2024, respectively | ||||||||
| Series E Preferred Stock, shares and shares issued and outstanding at December 31, 2025 and 2024, respectively | ||||||||
| Common Stock $ Par Value, shares authorized; shares and shares issued and outstanding at December 31, 2025 and 2024, respectively | ||||||||
| Additional paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders' Equity (Deficit) | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders' Equity (Deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-3 |
IIOT-OXYS, Inc. and Subsidiaries
Consolidated Statements of Operations
| For The Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenues | $ | $ | ||||||
| Cost of Sales | ||||||||
| Gross Profit | ||||||||
| Operating Expenses | ||||||||
| Amortization of intangible assets | ||||||||
| Write-down of intangible assets | ||||||||
| Payroll | ||||||||
| Professional fees | ||||||||
| Other general and administrative | ||||||||
| Total Operating Expenses | ||||||||
| Other Income (Expense) | ||||||||
| Gain (loss) on change in FMV of derivative liability | ( | ) | ||||||
| Loss on derivative | ( | ) | ||||||
| Gain on extinguishment of debt | ||||||||
| Interest expense | ( | ) | ( | ) | ||||
| Other income | ||||||||
| Total Other Income (Expense) | ( | ) | ( | ) | ||||
| Net Loss Before Income Taxes | ( | ) | ( | ) | ||||
| Provision for Income Tax | ||||||||
| Net Loss | $ | ( | ) | $ | ( | ) | ||
| Convertible Preferred Stock Dividend | ( | ) | ( | ) | ||||
| Net Loss Attributable to Common Stockholders | $ | ( | ) | $ | ( | ) | ||
| Net Profit (Loss) Per Share Attributable to Common Stockholders - Basic and Diluted | $ | ) | $ | ) | ||||
| Weighted Average Shares Outstanding Attributable to Common Stockholders - Basic and Diluted | ||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-4 |
IIOT-OXYS, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity (Deficit)
| Preferred Stock | Common Stock | |||||||||||||||||||||||||||||||||||
| Series A | Amount | Series E | Amount | Shares | Amount | Additional Paid-In Capital | Accumulated Deficit | Total Stockholders' Equity (Deficit) | ||||||||||||||||||||||||||||
| Balance - December 31, 2023 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||||||||
| Common stock issued for conversion of convertible note payables | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Sales commission paid on capital raise | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Convertible preferred stock dividend | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance - December 31, 2024 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Cancellation of Series A Preferred Stock as a result of change in control | ( | ) | ( | ) | – | – | ||||||||||||||||||||||||||||||
| Issuance of Series A Preferred Stock as a result of change in control | – | – | ||||||||||||||||||||||||||||||||||
| Issuance of Series E Preferred Stock in settlement of payables to related parties | – | – | ||||||||||||||||||||||||||||||||||
| Common stock issued to related parties for services | – | – | ||||||||||||||||||||||||||||||||||
| Common stock issued for services | – | – | ||||||||||||||||||||||||||||||||||
| Sales commissions paid on capital raise | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Common shares issued in settlement of accounts payable | – | – | ( | ) | ||||||||||||||||||||||||||||||||
| Convertible preferred stock dividend | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Net loss | – | – | – | ( | ) | ( | ) | |||||||||||||||||||||||||||||
| Balance - December 31, 2025 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-5 |
IIOT-OXYS, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
| For the Years Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities | ||||||||
| Amortization of intangible assets | ||||||||
| Write-down of intangible assets | ||||||||
| Common stock issued for services | ||||||||
| Amortization of debt discount on Series B and D Preferred Stock | ||||||||
| (Gain) loss on change in fair value of derivative liability | ( | ) | ||||||
| Changes in Operating Assets and Liabilities | ||||||||
| Decrease in accounts receivable | ||||||||
| Decrease in prepaid expenses and other current assets | ||||||||
| (Decrease) Increase in accounts payable | ( | ) | ||||||
| Increase in accrued liabilities | ||||||||
| Increase in derivative liability | ||||||||
| (Decrease) increase in shares payable to related parties | ( | ) | ||||||
| Increase in salaries payable to related parties | ||||||||
| Net Cash Used in Operating Activities | ( | ) | ( | ) | ||||
| Cash Flows Used in Investing Activities | ||||||||
| Net Cash Used in Investing Activities | ||||||||
| Cash Flows from Financing Activities | ||||||||
| Cash received from sale of Series B Preferred Stock | ||||||||
| Cash received from sale of Series D Preferred Stock | ||||||||
| Cash paid for offering costs | ( | ) | ( | ) | ||||
| Net Cash Provided by Financing Activities | ||||||||
| Net Increase in Cash and Cash Equivalents | ||||||||
| Cash and Cash Equivalents - Beginning of Period | ||||||||
| Cash and Cash Equivalents - End of Period | $ | $ | ||||||
| Supplement Disclosures of Cash Flow Information | ||||||||
| Interest paid | $ | $ | ||||||
| Income taxes paid | $ | $ | ||||||
| Supplemental Disclosures of Non-Cash Investing and Financing Activities | ||||||||
| Conversion of convertible notes payable and derivative liabilities | $ | $ | ||||||
| Common stock issued in settlement of accounts payable | $ | $ | ||||||
| Issuance of Series E Preferred stock in settlement of compensation payable | $ | $ | ||||||
The accompanying notes are an integral part of these audited consolidated financial statements.
| F-6 |
IIOT-OXYS, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2025 and 2024
NOTE 1 – NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN
Unless otherwise indicated, any reference to “the Company”, “we”, “us”, or “its” refers to IIOT-OXYS, Inc., a Nevada corporation, and as applicable to its wholly owned subsidiaries, OXYS Corporation, a Nevada corporation, and HereLab, Inc., a Delaware corporation.
IIOT-OXYS, Inc., incorporated in Nevada on July 6, 2017, (the “Company”) was established for the purpose of designing, building, testing, and selling Edge Computing Systems for the Industrial Internet. The Company is currently devoting substantially all its efforts in identifying, developing and marketing engineered products, software and services for applications in the Industrial Internet which involves collecting and processing data collected from a wide variety of industrial systems and machines.
On October 30, 2025, the Company had a change of control in management, and the Company and its debtholders mutually agreed to convert convertible promissory notes due, and compensation due to officers in exchange for issuance of Series E Preferred Stock in full settlement of all balances due (Note 4, Note 5, Note 7 and Note 8).
Basis of Presentation
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company. The financial statements and accompanying notes are the representations of the Company’s management, who is responsible for their integrity and objectivity. In the opinion of the Company’s management, the financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Certain prior year balances are reclassified to conform with current year balances for presentation purposes, resulting in no change in assets, liabilities and stockholders’ equity.
Principles of Consolidation
The consolidated financial statements for the years ended December 31, 2025 and 2024, respectively, include the accounts of Company, and its wholly-owned subsidiaries OXYS Corporation and HereLab, Inc. HereLab, Inc. currently is a non-operating entity and has no significant transactions. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of accounts payable, accrued liabilities and payable to related parties. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.
| F-7 |
Going Concern
The accompanying condensed consolidated financial
statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements,
the Company has suffered continuing operating losses, has a working capital deficit of $
Management believes that the Company will be able to achieve a satisfactory level of liquidity to meet the Company’s obligations for the next twelve months by generating cash through additional borrowings and/or sale of equity securities, as needed. However, there can be no assurance that the Company will be able to generate sufficient liquidity to maintain its operations. The financial statements do not include any adjustments that might result from the outcome of these uncertainties.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following summary of the significant accounting policies of the Company is presented to assist in the understanding of the Company’s financial statements. These accounting policies conform to the generally accepted accounting principles (the “GAAP”) in all material respects and have been consistently applied in preparing the accompanying consolidated financial statements.
Cash and Cash Equivalents
The Company
considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. The Company
reported a cash balance of $
Accounts Receivable and Allowance for Doubtful Accounts
Trade accounts receivable are carried at original
invoice amount less an estimate made for doubtful accounts. The Company determines the allowance for doubtful accounts by identifying
potential troubled accounts and by using historical experience and future expectations applied to an ageing of accounts and follows the
guidelines and processes of measuring both current and expected future credit losses. Trade accounts receivable are written off when deemed
uncollectible. Recoveries of trade accounts receivable previously written off are recorded as income when received. The Company adopted
and implemented Accounting Standards Codification (“ASC”) Topic 326 Financial Instruments – Credit Losses during
2023 which has no impact on the financial statements as of December 31, 2025 and 2024, respectively. There was
Long-Lived Assets
The Company regularly reviews the carrying value and estimated lives of its long-lived assets to determine whether indicators of impairment may exist that warrant adjustments to the carrying value or estimated useful lives. The determinants used for this evaluation include management’s estimate of the asset’s ability to generate positive income from operations and positive cash flow in future periods as well as the strategic significance of the assets to the Company’s business objectives.
Definite-lived intangible assets are amortized on a straight-line basis over the estimated periods benefited and are reviewed when appropriate for possible impairment.
The Company computes earnings (loss) per share in accordance with Financial Accounting Standards Board Accounting Standards Codification (“ASC”), ASC 260, “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible note and preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.
| F-8 |
Revenue Recognition
The Company recognizes revenue when the products are delivered to the customer or services are performed in accordance with the contractual terms of the contract with its customer. The Company recognizes revenue in accordance with ASC Topic No. 606, Revenue from Contracts with Customers which was adopted on January 1, 2018.
The Company recognizes revenue based on the following criteria of ASC 606:
| · | Identification of a contract or contracts with a customer. | |
| · | Identification of the performance obligations in the contract. | |
| · | Determination of contract price. | |
| · | Allocation of transaction price to the performance obligation. | |
| · | Recognition of revenue when, or as, performance obligation is satisfied. |
The Company used a practical expedient available under ASC 606-10-65-1(f)4 that permits it to consider the aggregate effect of all contract modifications that occurred before the beginning of the earliest period presented when identifying satisfied and unsatisfied performance obligations, transaction price, and allocating the transaction price to the satisfied and unsatisfied performance obligations.
The Company has elected to treat shipping and handling activities as the cost of sales. Additionally, the Company has elected to record revenue net of sales and other similar taxes.
Concentration of Credit Risk
Financial instruments that potentially expose
the Company to concentrations of risk consist primarily of cash and cash equivalents which are generally not collateralized. The Company’s
policy is to place its cash and cash equivalents with high quality financial institutions, in order to limit the amount of credit exposure.
Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC), up to $250,000. At December 31, 2025 and
2024, the Company had
Fair Value of Financial Instruments and Fair Value Measurements
ASC 820, “Fair Value Measurements and Disclosures”, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. The Company recorded derivative liabilities as Level 3 to measure the fair value of the change in derivative liabilities.
The Company’s consolidated financial instruments consist principally of cash, accounts receivable, prepaid expenses, accounts payable, accrued liabilities, notes payable and related parties payable. The Company believes that the recorded values of all the financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.
On October 30, 2025, the Company had a change of control in management and mutually agreed to cancel the three equity incentive plans (a) 952,212 unissued shares of common stock pursuant to the 2017 Plan, (b) 1,470,000 unissued shares of common stock pursuant to the 2019 Plan, and (c) 5,700,000 unissued shares of common stock pursuant to the 2022 Plan. At December 31, 2025, 0 shares of common stock remain unissued pursuant to the 2017 Plan, 2019 Plan and 2022 Plan. All three equity incentive plans were terminated effective December 31, 2025.
| F-9 |
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, “Income Taxes”. The asset and liability method provide that deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates and laws. The Company records a valuation allowance to reduce deferred tax assets to the amount that is believed more likely than not to be realized.
The Company follows the provisions of ASC 740-10, “Accounting for Uncertain Income Tax Positions.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceed the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
Convertible Debt and Convertible Preferred Stock
When the Company issues convertible debt or convertible preferred stock, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine whether the instrument should be classified as a liability under ASC 480, Distinguishing Liabilities from Equity, and second whether the conversion feature should be accounted for separately from the host instrument. A conversion feature of a convertible debt instrument or certain convertible preferred stock would be separated from the convertible instrument and classified as a derivative liability if the conversion feature, were it a standalone instrument, meets the definition of an “embedded derivative” in ASC 815, Derivatives and Hedging. Generally, characteristics that require derivative treatment include, among others, when the conversion feature is not indexed to the Company’s equity, as defined in ASC 815-40, or when it must be settled either in cash or by issuing stock that is readily convertible to cash. When a conversion feature meets the definition of an embedded derivative, it would be separated from the host instrument and classified as a derivative liability carried on the consolidated balance sheet at fair value, with any changes in its fair value recognized currently in the consolidated statements of operations.
Effective January 1, 2022, the Company early adopted ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity” using the modified retrospective method of adoption. ASU 2020-06 simplifies the accounting for convertible instruments by removing certain separation models in Subtopic 470- 20, Debt—Debt with Conversion and Other Options, for convertible instruments. Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under Topic 815, Derivatives and Hedging, or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized cost as long as no other features require bifurcation and recognition as derivatives. By removing those separation models, the interest rate of convertible debt instruments typically will be closer to the coupon interest rate when applying the guidance in Topic 835, Interest. The Company accounts for its Convertible Notes as single liabilities measured at amortized cost. As a result, the adoption of the guidance had a material impact on the consolidated financial statements and accompanying notes, resulting in adjustments of $371,125, $313,976 and $57,149 to the opening balance of additional paid-in capital, retained earnings, and long-term debt, respectively, as of January 1, 2022. The Company has updated its debt note (Note 5) with additional and modified disclosures as required by the standard upon adoption
| F-10 |
Segment Information
The Company’s Chief Executive Officer (“CEO”) is our chief operating decision maker (“CODM”) and evaluates performance and makes operating decisions about allocating resources based on financial data presented on a consolidated basis. The Company is devoting all its efforts to identifying technologies in developing and marketing engineered products, software and services for applications in the Industrial Internet, which involves collecting and processing data collected from a wide variety of industrial systems and machines. The Company’s CODM has determined that it operates as a reportable segment.
Recent Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 720): Improvements to Income Tax Disclosures (“ASU 2023-09”), which prescribes standard categories for the components of the effective tax rate reconciliation and requires disclosure of additional information for reconciling items meeting certain quantitative thresholds, requires disclosure of disaggregated income taxes paid, and modifies certain other income tax-related disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024 and allows for adoption on a prospective basis, with a retrospective option. The Company adopted the ASU 2023-09 as of January 1, 2024 and it did not have an impact of the adoption of ASU 2023-09 on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03 – Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40); Disaggregation of Income Statement Expenses. ASU 2024-03 is effective for public business entities for annual periods beginning after December 15, 2026. The Company is currently evaluating the impact, if any, that the updated standard will have on the consolidated financial statements.
NOTE 3 – INTANGIBLE ASSETS
The Company’s intangible assets comprise
of intellectual property revolving around their field tests, sensor integrations, and board designs. Intangible assets, net of amortization,
amounted to $
| Schedule of intangible assets | ||||||||
| December 31, 2025 | December 31, 2024 | |||||||
| Intangible Assets | $ | $ | ||||||
| Write-down of intangible assets | ( | ) | ||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Intangible Assets, net | $ | $ | ||||||
The Company determined that its intangible assets
were impaired totaling $
| F-11 |
NOTE 4 – COMMITMENTS AND CONTINGENCIES
In prior years, the Company entered into consulting agreements with one director, three executive officers, and one engineer of the Company, which included commitments to issue shares of the Company’s common stock from the Company’s 2017 Stock Incentive Plan and 2019 Stock Incentive Plans. The authorized shares pursuant to the 2017 Stock Incentive Plan (“2017 Plan”) were shares, and per 2019 Stock Incentive Plan (“2019 Plan”) were shares. The consulting agreements with two consultants have been terminated and shares have been issued in conjunction with the related separation agreements. The vested shares related to the three advisors and the executive officers have not yet been issued in full and therefore remain a liability. According to the terms of the agreements, shares were vested and issued per the Company’s 2017 Plan as of December 31, 2025 and 2024, and shares were vested and issued per the Company’s 2019 Plan as of December 31, 2025 and 2024, respectively.
In the event that a consulting agreement is terminated by either party pursuant to the terms of the agreement, all unvested shares which have been earned shall vest on a pro-rata basis as of the effective date of the termination of the agreement and all unearned, unvested shares shall be terminated. The value of the shares was assigned to a fair market value on the effective date of the agreement and the pro-rata number of shares earned was calculated and amortized at the end of each reporting period.
On March 18, 2022, the Company adopted 2022 Stock Incentive Plan (“2022 Plan”) and reserved shares of common stock for issuance to incentivize its management team. Pursuant to the terms of the 2022 Plan, shares of common stock were vested and shares and were issued as of December 31, 2025 and 2024, respectively. 100,000 shares vested remained to be issued to an advisor pursuant to 2022 Plan as of December 31, 2025.
On October 30, 2025, the Company had a change in control of management and all unvested shares pursuant to the 2017 Plan, 2019 Plan, and 2022 Plan were forfeited and cancelled. The Board of Directors subsequently terminated each of the 2017 Plan, the 2019 Plan, and the 2022 Plan effective December 31, 2025. As of December 31, 2025, there were no unvested shares remaining under any of the Plans.
Employment Agreement – CEO
On June 2, 2022, the Board approved an Employment
Agreement with the CEO dated effective April 1, 2022 whereby, the CEO will receive an annual salary of $100,000 which accrues unless converted
into shares of common stock of the Company at a stipulated conversion rate. If the Company reaches $1,000,000 in cumulative sales over
a 12-month period, the annual salary will increase to $150,000 commencing the following month. If the Company reaches $5,000,000 in cumulative
sales over a 12-month period, the annual salary will increase to $200,000 commencing the following month. The Company awarded the CEO
an aggregate of 7,000,000 shares of the Company’s common stock under the 2022 Plan, which will vest (i) 1,500,000 shares on April
1, 2023, (ii) 2,500,000 shares on April 1, 2024, and (iii) 3,000,000 shares on April 1, 2025. The shares are valued at 90% of the average
market price of the shares of 30 trading days at the end of each quarter. The Company recorded $
Employment Agreement – COO/Interim CFO
On June 2, 2022, the Board approved an Employment
Agreement with the COO/Interim CFO dated effective April 1, 2022, whereby, the officer will receive an annual salary of $100,000 which
accrues unless converted into shares of common stock of the Company at a stipulated conversion rate. If the Company reaches $1,000,000
in cumulative sales over a 12-month period, the annual salary will increase to $150,000 commencing the following month. If the Company
reaches $5,000,000 in cumulative sales over a 12-month period, the annual salary will increase to $200,000 commencing the following month.
The Company awarded the COO/Interim CFO an aggregate of 7,000,000 shares of the Company common stock under the 2022 Plan, which will vest
(i) 1,500,000 shares on April 1, 2023, (ii) shares on April 1, 2024, and (iii) 3,000,000 shares on April 1, 2025. The shares
are valued at 90% of the average market price of the shares of 30 trading days at the end of each quarter. The Company recorded $
| F-12 |
NOTE 5 – CONVERTIBLE NOTES PAYABLE
The following table summarizes the outstanding balance of convertible notes payable, interest and conversion rates as of December 31, 2025 and 2024, respectively.
| Schedule of outstanding balance of convertible notes payable | ||||||||||
December 31, 2025 | December 31, 2024 | |||||||||
| A. | Convertible note payable to an investor with interest at 12% per annum, convertible at any time into shares of common stock at the lowest VWAP or $0.001 per share. The note is secured by substantially all the assets of the Company. | $ | $ | |||||||
| D. | Convertible note payable to an investor with interest at 12% per annum, convertible at any time into shares of common stock at the lowest VWAP or $0.001 per share. The note is secured by substantially all the assets of the Company. | |||||||||
| E. | Convertible note payable to a related party with interest at 12% per annum, convertible at any time into shares of common stock at $0.0006 per share. Interest is payable. The note is secured by substantially all the assets of the Company. | |||||||||
| G. | Convertible note payable to an investor with interest at 10% per annum, convertible at any time into shares of common stock at $0.0006 per share. Note was issued as payment for future fees to be incurred under the related Equity Financing Agreement. Principal and interest due on maturity on April 29, 2026. The note is secured by substantially all the assets of the Company. | |||||||||
| Less current portion | ( | ) | ( | ) | ||||||
| Long term portion | $ | $ | ||||||||
A. January 18, 2018 Convertible Note and Warrants (“Note A”)
On March 14, 2022, the noteholder of Note A agreed to extend the maturity date of March 1, 2022 of the Senior Secured Convertible Promissory Note to March 1, 2023, in exchange for the reduction of the conversion price to $0.008 per share, and all prior Events of Default (as defined in the Note A) including penalties were waived, and all future Events of Default (as defined in the Note A) pertaining to the future payment of interest were waived through maturity. On July 21, 2023, the noteholder of Note A agreed to extend the maturity date to March 1, 2024 and then Note A was automatically extended for one-year term to March 1, 2026 unless written notice of objection was provided by the noteholder. The Note A is convertible into shares of common stock at the lowest VWAP or $0.001 per share during the look back period of 10 days prior to the conversion date, provided:
| · | Upon request of the noteholder of Note A, the Company shall issue twenty thousand dollars ($20,000) worth of common shares (the “1st Incentive Shares) and the price per 1st Incentive Share shall be the Volume-Weighted Average Price (VWAP) per common share of the Company (subject to adjustments) for the previous ten trading days. | |
| · | The Company shall use its best efforts to file a registration statement registering the resales of the 1st Incentive Shares within 45 calendar days from the date hereof. The Company shall use is best efforts to have the registration statement declared “effective” within sixty (60) calendar days from its filing. The Company shall use its best efforts to have a registration statement registering the resales of the 1st Incentive Shares remain effective until such time that the noteholder of Note A no longer holds any such 1st Incentive Shares. | |
| · | Upon full conversion of the Note A and Note D, the Company shall issue to the holder of Note A fifty thousand dollars ($50,000) worth of common shares (the “2nd Incentive Shares”) and the price per 2nd Incentive Share shall be the VWAP per common share of the Company (subject to adjustments) for the previous ten (10) Trading Days. | |
| · | The Company shall use its best efforts to file a registration statement registering the resales of the 2nd Incentive Shares within forty-five (45) calendar days from the date of issuance. The Company shall use is best efforts to have the registration statement declared “effective” within sixty (60) calendar days from its filing. The Company shall use its best efforts to have a registration statement registering the resales of the 2nd Incentive Shares remain effective until such time that the noteholder of Note A no longer holds any such 2nd Incentive Shares. |
| F-13 |
On October 30, 2025, the Company had a change
of control in management, and mutually agreed with the holder of Note A to convert the principal balance of Note A of $
The Company recorded interest expense of $
D. March 2019 Convertible Note and Warrants (“Note D”)
On March 14, 2022, the noteholder of Note D agreed to extend the maturity date of March 1, 2022 of the Senior Secured Convertible Promissory Note to March 1, 2023, in exchange for the reduction of the conversion price to $0.008 per share, and all prior Events of Default (as defined in the Note D) including penalties were waived, and all future Events of Default (as defined in the Note D) pertaining to the future payment of interest were waived through maturity. On July 21, 2023, the noteholder of Note D agreed to extend the maturity date to March 1, 2024 and then Note D was automatically extended for one-year term to March 1, 2026 unless written notice of objection was provided by the noteholder. The Note D is convertible into shares of common stock at the lowest VWAP or $0.001 per share during the look back period (see “Note A” above).
On October 30, 2025, the Company had a change
of control in management, and mutually agreed with the holder of Note D to convert the principal balance of Note D of $
The Company recorded interest expense of $
E. August 2019 Convertible Note and Warrants (“Note E”)
On August 6, 2025, the noteholder of Note E agreed to extend the maturity date of the Senior Secured Convertible Promissory Note to February 2, 2026 for no additional consideration. All other terms and conditions of the Note E remained the same.
On October 30, 2025, the Company had a change
of control in management, and mutually agreed with the holder of Note E to convert the principal balance of Note E of $
The Company recorded interest expense of $
G . July 2020 Equity Financing Arrangement (“Note G”)
On May 14, 2025, the noteholder of Note G agreed to extend the maturity date of the Secured Convertible Promissory Note from April 29, 2025 to October 29, 2025, and then to April 29, 2026 (Note 9). All other terms and conditions of the Note G remained the same.
During the year ended December 31, 2024, the noteholder
of Note G converted principal amount of $
The Company recorded interest expense on Note
G of $
| F-14 |
The following table sets forth the computation of basic and diluted net loss per share of common stock for the years ended December 31, 2025 and 2024, respectively:
| Schedule of computation of basic and diluted net loss per share of common stock | ||||||||
| For the Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Net loss attributable to common stockholders (basic) | $ | ( | ) | $ | ( | ) | ||
| Shares used to compute net loss per common share, basic and diluted | ||||||||
| Net loss per share attributable to common stockholders, basic and diluted | $ | ) | $ | ) | ||||
Basic net loss per share is calculated by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing net loss by the weighted-average number of common shares and common share equivalents outstanding for the period. Common stock equivalents are only included when their effect is dilutive. The Company’s potentially dilutive securities, which include stock options, convertible debt, convertible preferred stock and common stock warrants have been excluded from the computation of diluted net loss per share as they would be anti-dilutive. For all periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company’s net loss position.
The following outstanding common stock equivalents have been excluded from diluted net loss per common share for the years ended December 31, 2025 and 2024, respectively, because their inclusion would be anti-dilutive:
| Schedule of anti-dilutive shares | ||||||||
| As of December 31, | ||||||||
| 2025 | 2024 | |||||||
| Potentially issuable shares related to convertible notes payable and convertible preferred stock | ||||||||
| Potentially issuable vested shares to directors, officers and advisors | ||||||||
| Potentially issuable unvested shares to directors and officers | ||||||||
| Total anti-dilutive common stock equivalents | ||||||||
NOTE 7 – RELATED PARTIES
At December 31, 2025 and December 31, 2024, respectively,
the amount due to two stockholders was $
The Company executed three convertible promissory
notes payable to a director (see Note E) for the principal amount of $
On October
30, 2025, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Mr. Emmons pursuant to which
Mr. Emmons agreed to receive a monthly fee of $
On October 30, 2025, the Company had a change in control and GHS Investments, LLP became the majority owner of the issued and outstanding shares of common and preferred stock (See Note 5 and Note 8).
| F-15 |
NOTE 8 – STOCKHOLDERS' EQUITY
The Company has an authorized capital of shares, $ par value common stock, and shares of $ par value preferred stock at December 31, 2025. The Company has shares of common stock, shares of Series A Preferred Stock, shares of Series B, shares of Series C, shares of Series D, and shares of Series E Preferred Stock issued and outstanding as of December 31, 2025.
Common Stock
Holders of shares of common stock are entitled to one vote for each share on all matters to be voted on by the stockholders. Holders of common stock do not have cumulative voting rights. Holders of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the Board of Directors in its discretion of funds legally available, therefore. In the event of liquidation, dissolution, or winding up of the Company, the holders of common stock are entitled to share pro rata in all assets remaining after payment in full of all liabilities. All of the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock have no preemptive rights to purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect to the common stock.
On October 30, 2025, the Company issued shares of common stock to a vendor in settlement of past due rent of $. In addition, on the same date, the Company issued shares of common stock to a consultant in settlement of accounts payable of $. The common shares issued were valued at the fair value of common stock on the date of issuance.
Stock Incentive Plans
On December 14, 2017, the Board of Directors adopted the 2017 Stock Incentive Plan (the “2017 Plan”), under which shares of common stock were authorized for issuance. The 2017 Plan was terminated effective December 31, 2025 pursuant to a resolution of the Board of Directors. On October 30, 2025, the Company cancelled unissued shares pursuant to the 2017 Plan. As of December 31, 2025, shares remain unissued or unvested pursuant to the 2017 Plan.
On December 14, 2017, the Board of Directors of the Company approved the 2017 Stock Incentive Plan (the “2017 Plan”). Awards may be made under the 2017 Plan for up to 4,500,000 shares of common stock of the Company. All of the Company's employees, officers and directors, as well as consultants and advisors to the Company are eligible to be granted awards under the 2017 Plan. No awards can be granted under the 2017 Plan after the expiration of 10 years from the plan approval but awards previously granted may extend beyond that date. Awards may consist of both incentive and non-statutory options, restricted stock units, stock appreciation rights, and restricted stock awards. The 2017 Plan was terminated effective December 31, 2025 pursuant to a resolution of the Board of Directors adopted on April 10, 2026.
On March 11, 2019, the Board of Directors adopted
the 2019 Stock Incentive Plan (the “2019 Plan”), under which shares of common stock were authorized for issuance.
On March 5, 2025, the Company issued common shares to two consultants for services rendered, valued at $
On March 18, 2022, the Board of Directors adopted the 2022 Stock Incentive Plan (the “2022 Plan”), under which shares of common stock were authorized for issuance. The Company awarded shares under the 2022 Plan, of which had been issued as of December 31, 2025. On October 30, 2025, in connection with the change of control, unvested shares were cancelled. As of December 31, 2025, shares remained vested and unissued (subsequently issued on March 23, 2026 - see Note 10) and shares remained unvested. The 2022 Plan was terminated effective December 31, 2025 pursuant to a resolution of the Board of Directors. The 2022 Plan is further described in Note 4.
| F-16 |
On March 5, 2025, the Company issued
shares to an officer and a director and shares to an advisor, valued at $
On October 30, 2025, the Company had a change of control in management and mutually agreed to cancel 6,000,000 unissued and unvested shares of common stock pursuant to the 2022 Plan. At December 31, 2025, 100,000 shares of common stock remained vested and unissued pursuant to the 2022 Plan, and 0 shares of common stock remained unvested. On March 23, 2026, the Company issued the remaining 100,000 shares of common stock, fully vested, to the advisor (Note 10). The 2022 Plan was terminated effective December 31, 2025 pursuant to a resolution of the Board of Directors adopted on April 10, 2026.
The common shares vested pursuant to the 2022 Plan amounted to shares as of the change in control on October 30, 2025. For the year ended December 31, 2025 and 2024, the Company recorded $ and $ as stock compensation expense for shares and shares, respectively.
Shares earned and issued related to the consulting agreements are issued under the 2017 Plan and the 2019 Plan (see Note 4).
Vesting of the shares is subject to acceleration of vesting upon the occurrence of certain events such as a Change of Control (as defined in the agreement) or the listing of the Company’s common stock on a senior exchange.
A summary of the status of the Company’s non-vested shares at December 31, 2025 and 2024 and changes during the twelve months ended, is presented below:
| Schedule of non-vested shares | ||||||||
| 2022 Stock Incentive Plan | Shares of Common Stock | Weighted Average Exercise Price | ||||||
| Authorized shares per the 2022 Plan – shares | ||||||||
| Balance - December 31, 2023 | $ | |||||||
| Awarded and issued | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Balance – December 31, 2024 – (Vested) | $ | |||||||
| Balance – December 31, 2024 – (Unvested) | ||||||||
| Balance - December 31, 2024 | $ | |||||||
| Awarded | ||||||||
| Vested | ( | ) | ||||||
| Forfeited | ||||||||
| Balance – December 31, 2025 – (Vested) | $ | |||||||
| Balance – December 31, 2025 – (Unvested) | ||||||||
| F-17 |
Preferred Stock
Series A Supervoting Preferred Stock
The Board of Directors of the Company authorized the issuance of shares of preferred stock, $ par value per share, designated as Series A Supervoting Preferred Stock. On October 30, 2025, the Company entered into a Stock Purchase Agreement with GHS Investments, LLC, a Nevada limited liability company (“GHS”), pursuant to which, upon occurrence of certain conditions, including defaults by the Company under its agreements with GHS and subsequent waivers and extensions thereof by GHS, the Company would issue to GHS 100 shares of the Company’s Series A Supervoting Preferred Stock. On November 5, 2025, the closing of the Stock Purchase Agreement occurred, and GHS was issued shares of Series A Supervoting Preferred Stock. The following conditions were agreed and completed on the closing.
| · | On November 5, 2025, the Company and Cliff Emmons, CEO of the Company, mutually agreed to cancel shares of Series A Preferred Stock owned by Mr. Emmons. | |
| · | On November 5, 2025, the Company and Mr. Mitta, independent Director of the Company, mutually agreed to cancel shares of Series A Preferred Stock owned by Mr. Mitta. | |
| · | On November 5, 2025, the Company and Ms. Karen McNemar, COO/Interim CFO of the Company, mutually agreed to cancel shares of Series A Preferred Stock owned by Ms. McNemar. |
Dividends: Initially, there will be no dividends due or payable on Series A Supervoting Preferred Stock. Any future terms with respect to dividends shall be determined by the Board consistent with the Company’s Articles of Incorporation.
Liquidation and Redemption Rights: Upon the occurrence of a Liquidation Event (as defined below), the holders of Series A Supervoting Preferred Stock are entitled to receive net assets on a pro-rata basis. Each holder of Series A Supervoting Preferred Stock is entitled to receive ratably any dividends declared by the Board, if any, out of funds legally available for the payment of dividends. Liquidation Event means (i) the liquidation, dissolution or winding-up, whether voluntary or involuntary, of the Company, (ii) the purchase or redemption by the Company of the shares of any class of stock or the merger or consolidation of the Company with or into any other corporation or corporations, or (iii) the sale, license or lease of all or substantially all, or any material part of, the Company’s assets.
Conversion: Each holder of Series A Supervoting Preferred Stock may voluntarily convert its shares into shares of common stock of the Company at a rate of 1:100 (as may be adjusted for any combinations or splits with respect to such shares).
Rank: All shares of the Series A Supervoting Preferred Stock shall rank senior to the Company’s (A) common stock, par value $0.001 per share, and any other class or series of capital stock of the Company hereafter created.
Voting Rights:
| A. | If at least one share of Series A Super Voting Preferred Stock is issued and outstanding, then the total aggregate issued shares of Series A Super Voting Preferred Stock at any given time, regardless of their number, shall have voting rights equal to 20 times the sum of: i) the total number of shares of Common stock which are issued and outstanding at the time of voting, plus ii) the total number of shares of all Series of Preferred stocks which are issued and outstanding at the time of voting. | |
| B. | Each individual share of Series A Super Voting Preferred Stock shall have the voting rights equal to: | |
| [twenty times the sum of: {all shares of Common stock issued and outstanding at the time of voting + all shares of Series A and any newly designated Preferred stock issued and outstanding at the time of voting}] | ||
| Divided by: | ||
| [the number of shares of Series A Super Voting Preferred Stock issued and outstanding at the time of voting] |
| F-18 |
With respect to all matters upon which stockholders are entitled to vote or to which stockholders are entitled to give consent, the holders of the outstanding shares of Series A Super Voting Preferred Stock shall vote together with the holders of Common Stock without regard to class, except as to those matters on which separate class voting is required by applicable law or the Articles of Incorporation or Bylaws.
The Company had shares and shares of Series A Preferred Stock issued and outstanding at December 31, 2025 and 2024, respectively.
Series B Convertible Preferred Stock Equity Financing
On November 16, 2020, the Board of Directors of the Company had authorized issuance of up to shares of preferred stock, $ par value per share, designated as Series B Convertible Preferred Stock. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $1,200, subject to the increase set forth in the Certificate of Designation.
Dividends: Each share of Series B Convertible Preferred Stock shall be entitled to receive, and the Company shall pay, cumulative dividends of 12% per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Series B Convertible Preferred Share has been converted or redeemed (the “Dividend End Date”). Dividends may be paid in cash or in shares of Series B Convertible Preferred Stock. From and after the initial Closing Date, in addition to the payment of dividends pursuant to Section 2(a), each Holder shall be entitled to receive, and the Company shall pay, dividends on shares of Series B Convertible Preferred Stock equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. Any dividends that are not paid shall continue to accrue and shall entail a late fee which must be paid in cash, at the rate of 18% per annum or lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including the date of actual payment in full. Redemption following the event of default shall occur at an amount equaling the product of one hundred thirty-five percent (135%), multiplied by the sum of the stated value, all accrued but unpaid dividends and all other amounts due pursuant to the certificate of designation for all purchased shares. The Holder of Series B Convertible Preferred Stock waived its rights to the event of default of an amount equal to the 135% multiplied by the sum of the stated value of Series B Convertible Preferred Stock for all accrued but unpaid dividends and all other amounts due pursuant to the certificate of designation for all purchased shares. The Company shall pay no dividends on shares of the common stock unless it simultaneously complies with the previous sentence.
Voting Rights: The Series B Convertible Preferred Stock will vote together with the common stock on an as converted basis subject to the Beneficial Ownership Limitations (not in excess of 4.99% conversion limitation). However, as long as any shares of Series B Convertible Preferred Stock are outstanding, the Company shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Series B Convertible Preferred Stock directly and/or indirectly (a) alter or change adversely the powers, preferences or rights given to the Series b Convertible Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise Pari passu with, the Series B Convertible Preferred Stock or, authorize or create any class of stock ranking as to dividends senior to, or otherwise Pari passu with, the Series b Convertible Preferred Stock, (c) amend its Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Series B Convertible Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Liquidation: Upon any liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Company an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Series B Convertible Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Company shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full.
Conversion: Each share of Series B Convertible Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of common stock (subject to the limitations) determined by dividing the Stated Value of such share of Series B Convertible Preferred Stock by the Conversion Price. The Conversion Price for the Series B Convertible Preferred Stock shall be the amount equal to the lowest traded price for the Company’s common stock for the fifteen (15) Trading Days immediately preceding the date of such conversion. All such foregoing determinations will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the common stock during such a measuring period. Following an event of default, the Conversion price shall equal the lower of: (a) the then applicable Conversion Price; or (b) a price per share equaling 80% of the lowest traded price for the Company’s common stock during the ten (10) trading days preceding the relevant Conversion.
| F-19 |
Redemption: The Series B Convertible Preferred Stock may be redeemed by payment of the stated value thereof, with the following premiums based on the time of the redemption.
| · | 115% of the stated value if the redemption takes place within 90 days of issuance | |
| · | 120% of the stated value if the redemption takes place after 90 days and within 120 days of issuance | |
| · | 125% of the stated value if the redemption takes place after 120 days and within 180 days of issuance; and | |
| · | each share of Preferred Stock is redeemed one year from the day of issuance |
November 19, 2020
On November 19, 2020, pursuant to the terms of a Securities Purchase Agreement dated November 16, 2020 (the “SPA”), the Company entered into a new preferred equity financing agreement with GHS Investments, LLC (“GHS”) in the amount of up to $600,000. The SPA provides GHS’s purchase, from time to time, of up to 600 shares of the newly designated Series B Convertible Preferred Stock. The initial closing under the SPA consisted of 45 shares of Series B Convertible Preferred Stock, stated value $1,200 per share, issued to GHS for an initial purchase price of $45,000, or $1,000 per share. At the Company’s option, and subject to the terms of the SPA and the Certificate of Designation for the Series B Convertible Preferred Stock (the “COD”), additional closings in the amount of 40 shares of Series B Convertible Preferred Stock for a total purchase price of $40,000 may take place at a rate of up to once every 30 days. In connection with the initial closing in the amount of 45 shares of Series B Convertible Preferred Stock, the Company issued an additional 25 shares of Series B Convertible Preferred Stock to GHS as a commitment fee.
No additional closing may take place after the two-year anniversary of the SPA, or once the entire $600,000 amount has been funded. If the average daily trading volume for the Company’s common stock for the 30 trading days preceding a particular additional closing is at least $50,000 per day, the Company may, at its option, increase the amount of that additional closing to 75 shares of Series B Convertible Preferred Stock ($75,000).
The Series B Convertible Preferred Stock is classified as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the fifteen trading days immediately preceding the date of conversion.
Based on the requirements of ASC 815, Derivatives and Hedging, the conversion feature represents an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results for each reporting period.
On November 19, 2020, GHS purchased a total
of
shares of Series B Convertible Preferred Stock for gross proceeds of $
On November 19, 2020 (the date of receipt of cash
proceeds of $45,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of the derivative
liability associated with this convertible preferred stock and recorded a gain in connection with the change in fair market value of the
derivative liability of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0141, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0184, an expected dividend yield of 0%, expected volatility ranging from 160.41% to 440.99%, risk-free interest rates ranging from 0.07% to 5.46%, and an expected term ranging from 0.13 years to 1.50 years.
| F-20 |
December 16, 2020
On December 16, 2020, pursuant to the terms of
the SPA, GHS purchased an additional shares of Series B Convertible Preferred Stock for gross proceeds of $
On December 16, 2020 (the date of receipt of cash
proceeds of $85,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of the derivative
liability associated with this convertible preferred stock and recorded a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0141, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0184, an expected dividend yield of 0%, expected volatility ranging from 160.41% to 437.59%, risk-free interest rates ranging from 0.07% to 5.46%, and an expected term ranging from 0.21 years to 1.50 years.
December 20, 2021
On December 20, 2021, pursuant to the terms of
the SPA, GHS purchased an additional shares of Series B Convertible Preferred Stock for gross proceeds of $
The Company recalculated the value of the derivative
liability associated with this convertible preferred stock in connection with the change in fair market value of the derivative liability
and recorded a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0050 the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0070, an expected dividend yield of 0%, expected volatility ranging from 174.58% to 221.64%, risk-free interest rates ranging from 0.91% to 5.46%, and an expected term of 1.50 years.
| F-21 |
February 7, 2022
On February 7, 2022, pursuant to the terms of
the SPA, GHS purchased an additional shares of Series B Convertible Preferred Stock for gross proceeds of $
On February 7, 2022 (the date of receipt of
cash proceeds of $51,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability
of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0096, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0172, an expected dividend yield of 0%, expected volatility ranging from 160.35% to 201.38%, risk-free interest rates ranging from 1.09% to 5.46%, and an expected term of 1.35 to 1.5 years.
March 24, 2022
On March 24, 2022, pursuant to the terms of the
SPA, GHS purchased an additional shares of Series B Convertible Preferred Stock for gross proceeds of $
On March 24, 2022 (the date of receipt of
cash proceeds of $136,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative
liability of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0096, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0018, an expected dividend yield of 0%, expected volatility ranging from 160.35% to 202.70%, risk-free interest rates ranging from 1.55% to 5.46%, and an expected term of 1.48 to 1.5 years.
| F-22 |
November 17, 2022
On November 17, 2022, pursuant to the terms of
the SPA, GHS purchased an additional shares of Series B Convertible Preferred Stock for gross proceeds of $
On November 17, 2022 (the date of receipt of
cash proceeds of $61,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability
of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0020, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0022, an expected dividend yield of 0%, expected volatility ranging from 174.58% to 201.59%, risk-free interest rates ranging from 3.68% to 5.46%, and an expected term of 1.5 years.
August 24, 2023
On August 24, 2023, pursuant to the terms of the
SPA, GHS purchased shares of Series B Convertible Preferred Stock for gross proceeds of $
On August 24, 2023 (the date of receipt of cash
proceeds of $62,000 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of the derivative
liability associated with the convertible in connection with the change in fair market value of the derivative liability note and recorded
a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0014, the closing stock price of the Company’s common stock on the date of valuation ranging from $0.0006 to $0.0015, an expected dividend yield of 0%, expected volatility ranging from 189.98% to 202.70%, risk-free interest rates ranging from 3.48% to 5.46%, and an expected term of 1.5 years.
| F-23 |
April 16, 2024
On April 16, 2024, pursuant to the terms of the
SPA, GHS purchased shares of Series B Convertible Preferred Stock for gross proceeds of $
On April 16, 2024 (the date of receipt of cash
proceeds of $17,600 issuance), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of the derivative
liability associated with the convertible note in connection with the change in fair market value of the derivative liability and recorded
a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0009, the closing stock price of the Company’s common stock on the date of valuation ranging from $0.0006 to $0.0014, an expected dividend yield of 0%, expected volatility ranging from 186.23% to 205.33%, risk-free interest rates ranging from 3.48% to 5.18%, and an expected term of 1 year.
October 3, 2024
On October 3, 2024, pursuant to the terms of the
SPA, GHS purchased shares of Series B Convertible Preferred Stock and committed an additional 4 shares for services/fees
for gross consideration of $
On October 3, 2024 (the date of receipt of cash
proceeds of $39,140), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of the derivative
liability associated with the convertible note in connection with the change in fair market value of the derivative liability and recorded
a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.0009, the closing stock price of the Company’s common stock on the date of valuation ranging from $0.0006 to $0.0012, an expected dividend yield of 0%, expected volatility ranging from 182.85% to 201.59%, risk-free interest rates ranging from 3.48% to 4.16%, and an expected term of 1 year.
| F-24 |
Series C Convertible Preferred Stock
On January 8, 2024, the Board of Directors of
the Company had authorized issuance of up to shares of preferred stock, $0.001 per share, designated as Series C Convertible Preferred
Stock. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $
Dividends: Each share of Series C Convertible Preferred Stock shall be entitled to receive, and the Company shall pay, cumulative dividends of 12% per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Series C Convertible Preferred Share has been converted or redeemed (the “Dividend End Date”). Dividends may be paid in cash or in shares of Series C Convertible Preferred Stock. From and after the issuance date, in addition to the payment of dividends pursuant to Section 3 (a), each Holder shall be entitled to receive, and the Company shall pay, dividends on shares of Series C Convertible Preferred Stock equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. The Company shall pay no dividends on shares of the common stock unless it simultaneously complies with the previous sentence.
Voting Rights: The Holder shall be entitled to vote on an as-converted basis (subject to the Beneficial Ownership Limitation), together with the holders of Common Stock, with respect to any question upon which the holders of Common Stock have the right to vote, except as may be otherwise provided by applicable law. Except as otherwise expressly provided herein or as required by law, the Holders of Series C Preferred Stock and the holders of Common Stock shall vote together and not as separate classes.
Liquidation: Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), the Holders shall be paid, in preference and prior to any payment made to the holders of the Junior Securities and any other stock ranking in liquidation junior to the Series C Preferred Stock, an amount per share equal to the Stated Value (such amount is referred to herein as the “Liquidation Preference”). If upon a Liquidation Event, the assets to be distributed among the Holders shall be insufficient to permit payment in full to the Holders of the Liquidation Preference, then the entire assets of the Company shall be distributed ratably among such holders in proportion to the full respective Liquidation Preference to which they are entitled.
Conversion: The Holder shall have the right, at any time to convert such shares into Common Stock into that number of shares of common stock (subject to the Beneficial Ownership Limitation (as defined below)) determined by dividing the Stated Value of such share of Series C Preferred Stock by the Optional Conversion Rate (as defined below) (each, and “Optional Conversion”) at a conversion rate of the volume-weighted average price (“VWAP”) for the Company’s common stock for the ten (10) Trading Days immediately preceding the date of such conversion (the “Optional Conversion Rate”). “Trading Days” shall mean a day on which the means the principal markets or exchange on which the common stock is listed or quoted for trading on the date in question is open for business. “Beneficial Ownership Limitation” shall mean 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of Series C Preferred Stock held by the applicable Holder.
No fractional shares of Common Stock shall be issued upon conversion of shares of Series C Preferred Stock. If more than one share of Series C Preferred Stock shall be surrendered, or deemed surrendered, pursuant to subsection (c) above, for conversion at any one time by the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of such Series C Preferred Stock so surrendered. Any fractional share which would otherwise be issuable upon conversion of any shares of Series C Preferred Stock (after aggregating all shares of Series C Preferred Stock held by each holder) shall be rounded to the nearest whole number (with one-half being rounded upward).
The Company shall reserve, free from preemptive rights, out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of Series C Preferred Stock sufficient shares to provide for the conversion of all outstanding shares of Series C Preferred Stock. All shares of Common Stock which may be issued in connection with the conversion provisions set forth herein will, upon issuance by the Company, be validly issued, fully paid and non-assessable, with no personal liability attaching to the ownership thereof, and free from all taxes, liens or charges with respect thereto.
| F-25 |
All shares of Series C Preferred Stock which have been converted shall no longer be deemed to be outstanding and all rights with respect to such shares including the rights to receive dividends and to vote, shall immediately cease and terminate on the Optional Conversion Date, except only the right of the Holder thereof to receive shares of Common Stock in exchange thereof.
The Series C Convertible Preferred Stock is classified as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the fifteen trading days immediately preceding the date of conversion.
Based on the requirements of ASC 815, Derivatives and Hedging, the conversion feature represents an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results each reporting period.
March 1, 2024
On March 1, 2024, a convertible promissory noteholder
and the Company mutually agreed to convert the principal balance of $
The Company recalculated the value of the derivative
liability associated with this convertible preferred stock in connection with the change in fair market value of the derivative liability
and recorded a gain of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise prices ranging from $0.0004 to $0.00138, the closing stock price of the Company's common stock on the date of valuation ranging from $0.0006 to $0.0014, an expected dividend yield of 0%, expected volatility ranging from 191.75% to 202.70%, risk-free interest rates ranging from 3.48% to 5.09%, and an expected term of 1 year.
Series D Convertible Preferred Stock
On March 17, 2025, the Board of Directors of the
Company had authorized issuance of up to shares of preferred stock, $0.001 par value per share, designated as Series D Convertible
Preferred Stock. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $
Dividends: Each share of Series D Convertible Preferred Stock shall be entitled to receive, and the Company shall pay, cumulative dividends of 12% per annum, payable quarterly, beginning on the Original Issuance Date and ending on the date that such share of Series D Convertible Preferred Share has been converted or redeemed (the “Dividend End Date”). Dividends may be paid in cash or in shares of Series D Convertible Preferred Stock. From and after the issuance date, in addition to the payment of dividends pursuant to Section 3 (a), each Holder shall be entitled to receive, and the Company shall pay, dividends on shares of Series D Convertible Preferred Stock equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the common stock when, as and if such dividends are paid on shares of the common stock. Any dividends that are not paid shall continue to accrue and shall entail a late fee which must be paid in cash, at the rate of 18% per annum or lesser rate permitted by applicable law which shall accrue and compound daily from the dividend payment date through and including the date of actual payment in full. Redemption following the event of default shall occur at an amount equaling the product of one hundred thirty-five percent (135%), multiplied by the sum of the stated value, all accrued but unpaid dividends and all other amounts due pursuant to the certificate of designation for all purchased shares. The Holder of Series D Convertible Preferred Stock waived its rights to the event of default of an amount equal to the 135% multiplied by the sum of the stated value of Series D Convertible Preferred Stock for all accrued but unpaid dividends and all other amounts due pursuant to the certificate of designation for all purchased shares. The Company shall pay no dividends on shares of the common stock unless it simultaneously complies with the previous sentence.
| F-26 |
Voting Rights: The Holder shall be entitled to vote on an as-converted basis (subject to the Beneficial Ownership Limitation), together with the holders of Common Stock, with respect to any question upon which the holders of Common Stock have the right to vote, except as may be otherwise provided by applicable law. Except as otherwise expressly provided herein or as required by law, the Holders of Series D Preferred Stock and the holders of Common Stock shall vote together and not as separate classes.
Liquidation: Upon any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (a “Liquidation”), the Holders shall be paid, in preference and prior to any payment made to the holders of the Junior Securities and any other stock ranking in liquidation junior to the Series D Preferred Stock, an amount per share equal to the Stated Value (such amount is referred to herein as the “Liquidation Preference”). If upon a Liquidation Event, the assets to be distributed among the Holders shall be insufficient to permit payment in full to the Holders of the Liquidation Preference, then the entire assets of the Company shall be distributed ratably among such holders in proportion to the full respective Liquidation Preference to which they are entitled.
Conversion: The Holder shall have the right, at any time to convert such shares into Common Stock into that number of shares of common stock (subject to the Beneficial Ownership Limitation (as defined below)) determined by dividing the Stated Value of such share of Series D Preferred Stock by the Optional Conversion Rate (as defined below) (each, and “Optional Conversion”) at a conversion rate of the volume-weighted average price (“VWAP”) for the Company’s common stock for the ten (10) Trading Days immediately preceding the date of such conversion (the “Optional Conversion Rate”). “Trading Days” shall mean a day on which the means the principal markets or exchange on which the common stock is listed or quoted for trading on the date in question is open for business. “Beneficial Ownership Limitation” shall mean 4.99% of the number of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock issuable upon conversion of Series D Preferred Stock held by the applicable Holder.
No fractional shares of Common Stock shall be issued upon conversion of shares of Series D Preferred Stock. If more than one share of Series D Preferred Stock shall be surrendered, or deemed surrendered, pursuant to subsection (c) above, for conversion at any one time by the same Holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of such Series D Preferred Stock so surrendered. Any fractional share which would otherwise be issuable upon conversion of any shares of Series D Preferred Stock (after aggregating all shares of Series D Preferred Stock held by each holder) shall be rounded to the nearest whole number (with one-half being rounded upward).
The Company shall reserve, free from preemptive rights, out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of Series D Preferred Stock sufficient shares to provide for the conversion of all outstanding shares of Series D Preferred Stock. All shares of Common Stock which may be issued in connection with the conversion provisions set forth herein will, upon issuance by the Company, be validly issued, fully paid and non-assessable, with no personal liability attached to ownership thereof, and free from all taxes, liens or charges with respect thereto.
All shares of Series D Preferred Stock which have been converted shall no longer be deemed to be outstanding and all rights with respect to such shares including the rights to receive dividends and to vote, shall immediately cease and terminate on the Optional Conversion Date, except only the right of the Holder thereof to receive shares of Common Stock in exchange thereof.
The Series D Convertible Preferred Stock is classified as temporary equity, as it is convertible upon issuance at an amount equal to the lowest traded price for the Company’s common stock for the fifteen trading days immediately preceding the date of conversion.
Based on the requirements of ASC 815, Derivatives and Hedging, the conversion feature represents an embedded derivative that is required to be bifurcated and accounted for as a separate derivative liability. The derivative liability is originally recorded at its estimated fair value and is required to be revalued at each conversion event and reporting period. Changes in the derivative liability fair value are reported in operating results for each reporting period.
| F-27 |
March 21, 2025
On March 21, 2025, pursuant to the terms of the
SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On March 21, 2025 (the date of receipt of
cash proceeds of $50,800), the Company valued the fair value of the derivative and recorded an initial derivative liability of
$
The Company recalculated the value of the
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price ranging from $0.0004 to $0.0008, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0006 to $0.001, an expected dividend yield of 0%, expected volatility ranging from 191.75% to 199.73%, risk-free interest rates ranging from 3.48% to 4.04%, and an expected term of 1 year.
April 10, 2025
On April 10, 2025, pursuant to the terms of the
SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On April 10, 2025 (the date of receipt of cash
proceeds of $44,100), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price ranging from $0.0004 to $0.0007, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0006 to $0.0010, an expected dividend yield of 0%, expected volatility ranging from 191.75% to 199.89%, risk-free interest rates ranging from 3.48% to 3.97%, and an expected term of 1 year.
| F-28 |
May 14, 2025 - 1
On May 14, 2025, pursuant to the terms of the
SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On May 10, 2025 (the date of receipt of cash
proceeds of $10,780), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price ranging from $0.0004 to $0.0007, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0006 to $0.0010, an expected dividend yield of 0%, expected volatility ranging from 191.75% to 199.89%, risk-free interest rates ranging from 3.48% to 4.14%, and an expected term of 1 year.
May 14, 2025 - 2
On May 14, 2025, pursuant to the terms of the
SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On May 10, 2025 (the date of receipt of cash proceeds
of $24,500), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price ranging from $0.0004 to $0.0007, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0006 to $0.0010, an expected dividend yield of 0%, expected volatility ranging from 191.75% to 199.89%, risk-free interest rates ranging from 3.48% to 4.14%, and an expected term of 1 year.
| F-29 |
October 30, 2025
On October 30, 2025, pursuant to the terms of
the SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On October 30, 2025 (the date of receipt of cash
proceeds of $34,300), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price ranging from $0.0005 to $0.0006, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0005 to $0.0007, an expected dividend yield of 0%, expected volatility ranging from 198.09% to 198.95%, risk-free interest rates ranging from 3.48% to 3.70%, and an expected term of 1 year.
December 2, 2025
On December 2, 2025, pursuant to the terms of
the SPA, GHS purchased shares of Series D Convertible Preferred Stock for gross consideration of $
On December 2, 2025 (the date of receipt of cash
proceeds of $33,320), the Company valued the fair value of the derivative and recorded an initial derivative liability of $
The Company recalculated the value of
derivative liability associated with the convertible note in connection with the change in fair market value of the derivative
liability and recorded a loss of $
The Company valued the conversion feature using the Black-Scholes option pricing model with the following assumptions: conversion exercise price of $0.0006, the closing stock price of the Company’s common stock on the date of valuation ranges from $0.0007 to $0.0008, an expected dividend yield of 0%, expected volatility ranging from 174.48% to 198.95%, risk-free interest rates ranging from 3.48% to 3.59%, and an expected term of 1 year.
| F-30 |
Series E Preferred Stock
On October 30, 2025, the Board of Directors of
the Company had authorized issuance of up to shares of preferred stock, $0.001 par value per share, designated as Series E Convertible
Preferred Stock. Each share of Preferred Stock shall have a par value of $0.001 per share and a stated value of $
Dividends: Each share of Preferred Stock shall be entitled to receive, and the Corporation shall pay, cumulative dividends of 10% per annum, payable quarterly, beginning on the Original Issue Date and ending on the date that such share of Preferred Share has been converted or redeemed. Dividends may be paid in cash or in shares of Preferred Stock, at the Corporation’s discretion. From and after the initial Closing Date, in addition to the payment of dividends, each Holder shall be entitled to receive, and the Corporation shall pay, dividends on shares of Preferred Stock equal to (on an as-if-converted-to-Common-Stock basis) and in the same form as dividends actually paid on shares of the Common Stock when, as and if such dividends are paid on shares of the Common Stock. The Corporation shall pay no dividends on shares of the Common Stock unless it simultaneously complies with the previous sentence. Any dividends that are not paid a Dividend Payment Date shall continue to accrue and shall entail a late fee (“Late Fees”), which must be paid in cash, at the rate of 12% per annum or the lesser rate permitted by applicable law which shall accrue and compound daily from the Dividend Payment Date through and including the date of actual payment in full.
Voting Rights. The Preferred Stock will vote together with the common stock on an as-converted basis subject to the Beneficial Ownership Limitations. However, as long as any shares of Preferred Stock are outstanding, the Corporation shall not, without the affirmative vote of the Holders of a majority of the then outstanding shares of the Preferred Stock directly and/or indirectly (a) alter or change adversely the powers, preferences or rights given to the Preferred Stock or alter or amend this Certificate of Designation, (b) authorize or create any class of stock ranking as to redemption or distribution of assets upon a Liquidation (as defined in Section 5) senior to, or otherwise pari passu with, the Preferred Stock or, authorize or create any class of stock ranking as to dividends senior to, or otherwise pari passu with, the Preferred Stock, (c) amend its Articles of Incorporation or other charter documents in any manner that adversely affects any rights of the Holders, (d) increase the number of authorized shares of Preferred Stock, or (e) enter into any agreement with respect to any of the foregoing.
Liquidation: Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary (a “Liquidation”), the Holders shall be entitled to receive out of the assets, whether capital or surplus, of the Corporation an amount equal to the Stated Value, plus any accrued and unpaid dividends thereon and any other fees or liquidated damages then due and owing thereon under this Certificate of Designation, for each share of Preferred Stock before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in full such amounts, then the entire assets to be distributed to the Holders shall be ratably distributed among the Holders in accordance with the respective amounts that would be payable on such shares if all amounts payable thereon were paid in full. A Fundamental Transaction or Change of Control Transaction shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than forty-five (45) days prior to the payment date stated therein, to each Holder.
Conversion: Each share of Preferred Stock shall be convertible, at any time and from time to time from and after the Original Issue Date at the option of the Holder thereof, into that number of shares of Common Stock (subject to certain limitations) determined by dividing the Stated Value of such share of Preferred Stock by Conversion Price. Holders shall effect conversions by providing the Corporation with the form of conversion notice. Each Notice of Conversion shall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to the conversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which such conversion is to be effected, which date may not be prior to the date the applicable Holder delivers by facsimile or email such Notice of Conversion to the Corporation (such date, 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 hereunder. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifest or mathematical error. To effect conversions of shares of Preferred Stock, a Holder shall not be required to surrender the certificate(s) representing the shares of Preferred Stock to the Corporation unless all of the shares of Preferred Stock represented thereby are so converted, in which case such Holder shall deliver the certificate representing such shares of Preferred Stock promptly following the Conversion Date at issue. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shall be canceled and shall not be reissued.
| F-31 |
Conversion price: The conversion price for the Preferred Stock shall be a fixed price equal to $0.0005. All such foregoing determinations will be appropriately adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the Common Stock during such measuring period. Nothing herein shall limit a Holder’s right to pursue actual damages including, but not limited to, as a result of a Triggering Event pursuant to Section 10 hereof and the Holder shall have the right to pursue all remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief. The exercise of such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof or under applicable law.
Corporation Redemption: The Corporation shall have the right to redeem, all (but not less than all), shares of the Preferred Stock issued and outstanding at any time after the Original Issue Date, upon three (3) business days’ notice, at a redemption price per Preferred Stock then issued and outstanding (the “Corporation Redemption Price”), equal to the product of (i) the Premium Rate (means 1.10) multiplied by (ii) the sum of (x) the Stated Value, (y) all accrued but unpaid dividends, and (z) all other amount due to the Holder pursuant to this Certificate of Designation and/or any Transaction Document including, but not limited to Late Fees, liquidated damages and the legal fees and expenses of the Holder’s counsel relating to this Certification of Designation, any other Transaction Document and/or the transactions contemplated thereunder and/or hereunder. Notwithstanding the delivery of a Corporation Redemption Notice, a Holder may convert some or all of its shares of Preferred Stock until the date it receives in full Corporation Redemption Price, provided, however, that notwithstanding anything to the contrary provided herein or elsewhere (i) in the event a Holder would be precluded from converting any shares of Preferred Stock, due to the limitation contained in Section 5, the Corporation Redemption Payment Date, for such Holder only, shall automatically be extended by one hundred twenty (120) days (or such shorter period as so provided to the Corporation by the Holder at any time and (ii) if a Mandatory Conversion has occurred prior to the Corporation Redemption Payment Date and for whatever reason including, but not limited to, the Beneficial Ownership Limitation, a Holder still owns Preferred Stock, any such Holder may elect to extend the Corporation Redemption Payment Date as to any or all of such Holder’s Preferred Stock for up to one hundred twenty (120) days following the Corporation Redemption Payment Date to allow such Holder to convert its remaining Preferred Stock into Conversion Shares.
On October 30, 2025,
the Company entered into a Debt Exchange Agreement (the “Emmons DEA”) with Clifford L. Emmons, it’s Chief Executive
Officer and Director. Pursuant to the Emmons DEA, Mr. Emmons exchanged $
On October
30, 2025, the Company entered into a Debt Exchange Agreement (the “Mitta DEA”) with Vidhyadhar Mitta, it’s former Director.
Pursuant to the Mitta DEA, Mr. Mitta exchanged $
On October
30, 2025, the Company entered into a Debt Exchange Agreement (the “McNemar DEA”) with Karen McNemar, it’s former Chief
Financial Officer. Pursuant to the McNemar DEA, Ms. McNemar exchanged $
On October 30, 2025, the Company entered into
a Debt Exchange Agreement (the “Senior Secured DEA”) with Sergey Gogin and Yvsgramorah, LLC, an entity controlled by Mr. Gogin
(the “Senior Secured Holders”). Pursuant to the Senior Secured DEA, the Senior Secured Holders exchanged an aggregate of $
| F-32 |
The following table represents the change in the fair value of the derivative liabilities for the year ended December 31, 2025 and 2024, respectively.
| Schedule of change in the fair value of the derivative liabilities | ||||||||||||
| Level 1 | Level 2 | Level 3 | ||||||||||
| Balance at December 31, 2023 | $ | $ | $ | |||||||||
| Additions to derivative liability | ||||||||||||
| Change in the fair value of derivative liability | ||||||||||||
| Balance at December 31, 2024 | $ | $ | $ | |||||||||
| Balance at December 31, 2024 | $ | $ | $ | |||||||||
| Additions to derivative liability | ||||||||||||
| Change in the fair value of derivative liability | ( |
) | ||||||||||
| Balance at December 31, 2025 | $ | $ | $ | |||||||||
As a result of issuance of derivative instruments,
the Company recorded a derivative liability of $
Warrants
A summary of the status of the Company’s warrants as of December 31, 2025 and 2024, and changes during the nine months then ended, is presented below:
| Schedule of warrant activity | ||||||||||||
Shares Under Warrants | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life | ||||||||||
| Outstanding at December 31, 2023 | $ | Years | ||||||||||
| Issued | ||||||||||||
| Expired/Forfeited | ( | ) | ||||||||||
| Outstanding at December 31, 2024 | $ | – | ||||||||||
| Outstanding at December 31, 2024 | $ | – | ||||||||||
| Issued | ||||||||||||
| Expired/Forfeited | ||||||||||||
| Outstanding at December 31, 2025 | $ | – | ||||||||||
| F-33 |
NOTE 9 – INCOME TAXES
The following is a reconciliation of the statutory federal income tax rate to the effective tax rate reported in the financial statements for the years ended December 31, 2025 and 2024, respectively:
| Reconciliation of income tax rate | 2025 | 2024 | ||||||||||||||
| US Federal statutory rate | $ | $ | ||||||||||||||
| Effects of: | ||||||||||||||||
| State and local taxes, net of federal benefits | ||||||||||||||||
| Other permanent items | ( | ) | ( | ) | ||||||||||||
| Change in valuation allowance | ( | ) | ( | ) | ||||||||||||
| Tax expense at actual rate | $ | $ | ||||||||||||||
The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows:
| Schedule of deferred tax assets and liabilities | ||||||||
| December 31, 2025 |
December 31, 2024 | |||||||
| Deferred tax assets: | ||||||||
| Net operating loss carry forward | $ | $ | ||||||
| Total gross deferred tax assets | ||||||||
| Less: valuation allowance | ( |
) | ( |
) | ||||
| Net deferred tax assets | $ | $ | ||||||
Deferred income taxes are provided for the tax effects of transactions reported in the financial statements and consist of deferred taxes related primarily to differences between the bases of certain assets and liabilities for financial and tax reporting. The deferred taxes represent the future tax return consequences of those differences, which will either be deductible or taxable when the assets and liabilities are recovered or settled.
| F-34 |
At December 31, 2025 and 2024, the Company had
accumulated net operating losses of approximately $
In the ordinary course of business, the Company’s income tax returns are subject to examination by various taxing authorities. Such examinations may result in future tax and interest assessment by these taxing authorities. Accordingly, the Company believes that it is more likely than not that it will realize the benefits of tax positions it has taken in its tax returns or for the amount of any tax benefit that exceeds the cumulative probability threshold in accordance with FASB ASC 740. Differences between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not expected to have a material adverse effect on the Company’s financial position. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. The Company is delinquent in filing its Federal and State income tax returns for the years ended December 31, 2022, 2023, 2024, and 2025. As of December 31, 2025, tax years 2025, 2024, 2023, and 2022 remain open for examination by the Internal Revenue Service and the Massachusetts Division of Revenue. The Company has received no notice of audit from the Internal Revenue Service or the Massachusetts Division of Revenue for any of the open tax years.
NOTE 10 – SUBSEQUENT EVENTS
On March 6, 2026, the Company entered into a Securities Purchase Agreement ( “SPA”) with GHS Investments for the purchase and sale of up to 97 shares of the Company’s Series D Preferred Stock for an aggregate purchase price of up to $88,000. On March 12, 2026, pursuant to the SPA, the Company issued to GHS Investments 43 shares of Series D Preferred Stock, $0.001 par value, $1,200 stated value, for a cash consideration of $40,140. The Company paid sales commissions of $860 and $2,000 in legal fees to complete this sale transaction.
On March 23, 2026, the Company issued 100,000 shares of its common stock, fully vested, to a consultant pursuant to 2022 Plan (Note 8).
On April 10, 2026, the Board of Directors adopted a resolution to terminate the company’s three equity compensation plans: the 2017 Stock Incentive Plan (the "2017 Plan"), the 2019 Stock Incentive Plan (the "2019 Plan"), and the 2022 Stock Incentive Plan (the "2022 Plan"). Each of the Plans was terminated effective December 31, 2025.
On April 16, 2026, the Board of Directors adopted a resolution to approve and authorize an amendment to the Original Certificate of Designation for Series D to increase the total number of authorized shares of Series D Preferred Stock from 210 shares to 500 shares.
On April 21, 2026, GHS Investments entered into a financing arrangement and purchased 45 shares of Series D Convertible Preferred Stock, $0.001 par value, $1,200 stated value, for a cash consideration of $43,100, The Company paid sales commissions of $900 and $1,000 in legal fees to complete this sale transaction.
Management evaluated all subsequent events through the date of filing.
| F-35 |
Exhibit 10.11
Extension No. 6 TO CONVERTIBLE PROMISSORY NOTE
This Extension No. 6 (this “Extension”) to the Convertible Promissory Note, issued July 29, 2020 (the “Issuance Date”), as amended, in the original principal amount of $75,000, is by and between IIOT-OXYS, Inc., a Nevada corporation (the “Borrower”), on the one hand, and GHS Investments LLC, a Nevada limited liability company (the “Holder”), on the other hand. The Borrower and the Holder will be referred to individually as a “Party” and collectively as the “Parties.” Any capitalized terms not defined in this Extension will have the meaning set forth in the Convertible Promissory Note issued July 29, 2020, as amended, issued to the Holder by the Borrower (the “Note”), attached hereto as Exhibit A.
RECITALS
WHEREAS, on July 29, 2020, the Borrower issued to the Holder the Note in the original principal amount of $75,000 (the “Principal Amount”);
WHEREAS, on April 29, 2021, the Borrower and the Holder entered into Extension No. 1 to the Convertible Promissory Note extending the maturity date to October 29, 2021;
WHEREAS, on November 4, 2021, the Borrower and the Holder entered into Extension No. 2 to the Convertible Promissory Note extending the maturity date to April 29, 2022;
WHEREAS, on April 29, 2022, the Borrower and the Holder entered into Extension No. 3 to the Convertible Promissory Note extending the maturity date to April 29, 2023;
WHEREAS, on May 1, 2023, the Borrower and the Holder entered into Extension No. 4 to the Convertible Promissory Note extending the maturity date to April 29, 2025;
WHEREAS, on May 14, 2025, the Borrower and the Holder entered into Extension No. 5 to the Convertible Promissory Note extending the maturity date to October 29, 2025; and
WHEREAS, the Parties wish to amend the Note to extend the Maturity Date to April 29, 2026 (the “Maturity Date”).
THEREFORE, in consideration of the foregoing recitals, mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as set forth below.
AGREEMENT
1. Extended Maturity Date. Pursuant to 4.3 of the Note, the definition of “Maturity Date” in the Note shall be April 29, 2026.
2. Waiver of Prior Defaults. Upon entering into this Extension, the Holder hereby waives all Events of Default, known or unknown to the Holder, by Borrower prior to the Effective Date.
3. No Other Changes. Except as extended hereby, the Note will continue to be, and will remain, in full force and effect. Except as provided herein, this Extension will not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Note or (ii) to prejudice any right or rights which the Parties may now have or may have in the future under or in connection with the Note or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.
| 1 |
4. Authority; Binding on Successors. The Parties represent that they each have the authority to enter into this Extension. This Extension will be binding on, and will inure to the benefit of, the Parties to it and their respective heirs, legal representatives, successors, and assigns.
5. Governing Law and Venue. This Extension and the rights and duties of the Parties hereto will be construed and determined in accordance with the terms of the Note.
6. Incorporation by Reference. The terms of the Note, except as amended by this Extension, are incorporated herein by reference and will form a part of this Extension as if set forth herein in their entirety.
7. Counterparts; Facsimile Execution. This Extension may be executed in any number of counterparts and all such counterparts taken together will be deemed to constitute one instrument. Delivery of an executed counterpart of this Extension by facsimile or email will be equally as effective as delivery of a manually executed counterpart of this Extension.
| 2 |
IN WITNESS WHEREOF, each of the undersigned has executed this Extension the respective day and year set forth below:
| BORROWER: | IIOT-OXYS, Inc. | |
| Date: October 29, 2025 | By | /s/ Clifford L. Emmons |
| Clifford L. Emmons, CEO | ||
| HOLDER: | ||
| Date: October 29, 2025 | By | /s/ Sarfraz Hajee |
| Sarfraz Hajee, Member | ||
| 3 |
EXHIBIT A
Convertible Promissory Note issued July 29, 2020
[See Attached]
| 4 |
Exhibit 10.17
AMENDMENT No. 2 TO SECUriTIES PURCHASE AGREEMENT
This Amendment No. 2 to that certain Securities Purchase Agreement described below (this “Amendment”), dated effective December 1, 2025 (the “Effective Date”), is by and between IIOT-OXYS, Inc., a Nevada corporation (the “Company”), on the one hand, and GHS Investments, LLC, a Nevada limited liability company (“GHS”), on the other hand. The Company and GHS will be referred to individually as a “Party” and collectively as the “Parties.” Any capitalized terms not defined in this Amendment will have the meaning set forth in the Securities Purchase Agreement, as amended, dated March 21, 2025 between the Company and the GHS (the “Agreement”), attached hereto as Exhibit A.
RECITALS
WHEREAS, the Company and GHS have entered into the Agreement pursuant to which GHS agreed to purchase certain securities of the Company;
WHEREAS, pursuant to the definition of “Closing” and Section 2.1 of the Agreement, there are four “additional Closings”; and
WHEREAS, pursuant to Section 5.5 of the Agreement, the Parties wish to amend the definition of “Closing,” “Preferred Stock,” and Section 2.1 of the Agreement to allow for a fifth additional Closing in the amount of thirty-four (34) Preferred Shares.
THEREFORE, in consideration of the foregoing recitals, mutual covenants contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as set forth below.
AGREEMENT
1. Amendment to “Closing” Definition in the Agreement. As of the Effective Date, the definition of “Closing” in the Agreement is hereby amended to read as follows:
“Closing” means the closing (s) of the purchase and sale of the Securities pursuant to Section 2.1, which shall occur on each Closing Date. The Initial Closing will be for the purchase of sixty (60) Preferred Shares at the aggregate purchase price of $60,000 and there will be up to five (5) additional Closings at the Purchaser’s discretion for up to seventy (70), twenty-five (25), thirty-five (35), thirty-five (35), and thirty-four (34) Preferred Shares at the Purchase Prices of up to $70,000, $25,000, $35,000, $35,000, and $34,000, respectively.
2. Amendment to “Preferred Stock” Definition in the Agreement. As of the Effective Date, the definition of “Preferred Stock” in the Agreement is hereby amended to read as follows:
“Preferred Stock” means two hundred and fifty-nine (259) shares of the Company’s Series D Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.
3. Amendment to Section 2.1 of the Agreement. As of the Effective Date, Section 2.1 7(b) of the Agreement is hereby amended to read as follows:
2.1Closings. Upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, sixty (60) shares of Preferred Stock at price of $1,000 per share of Preferred Stock and up to five (5) additional Closings at the Purchaser’s discretion for up to seventy (70), twenty-five (25), thirty-five (35), thirty-five (35), and thirty-four (34) Preferred Shares at the Purchase Prices of up to $70,000, $25,000, $35,000, $35,000, and $34,000, respectively. (the “Purchased Shares”). The Purchaser shall deliver to the Company, via wire transfer immediately available funds equal to the Purchaser’s Subscription Amount as set forth on the signature page hereto executed by the Purchaser for each Closing, and the Company shall deliver to the Purchaser such number of shares of the Preferred Stock purchased, as determined pursuant to Section 2.2(a) and the Purchaser shall deliver the other items set forth in Section 2.2 deliverable at each Closing. Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, each Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree.
| 1 |
4. No Other Changes. Except as amended hereby, the Agreement will continue to be, and will remain, in full force and effect. Except as provided herein, this Amendment will not be deemed (i) to be a waiver of, or consent to, or a modification or amendment of, any other term or condition of the Agreement or (ii) to prejudice any right or rights which the Parties may now have or may have in the future under or in connection with the Agreement or any of the instruments or agreements referred to therein, as the same may be amended, restated, supplemented or otherwise modified from time to time.
5. Authority; Binding on Successors. The Parties represent that they each have the authority to enter into this Amendment. This Amendment will be binding on, and will inure to the benefit of, the Parties to it and their respective heirs, legal representatives, successors, and assigns.
6. Governing Law and Venue. This Amendment and the rights and duties of the Parties hereto will be construed and determined in accordance with the terms of the Agreement.
7. Incorporation by Reference. The terms of the Agreement, except as amended by this Amendment are incorporated herein by reference and will form a part of this Amendment as if set forth herein in their entirety.
8. Counterparts; Facsimile Execution. This Amendment may be executed in any number of counterparts and all such counterparts taken together will be deemed to constitute one instrument. Delivery of an executed counterpart of this Amendment by facsimile or email will be equally as effective as delivery of a manually executed counterpart of this Amendment.
[Signatures to Follow]
| 2 |
IN WITNESS WHEREOF, each of the undersigned has executed this Amendment the respective day and year set forth below:
| THE COMPANY: | IIOT-OXYS, Inc. | |
| Date: December 1, 2025 | By | /s/ Clifford L. Emmons |
| Clifford L. Emmons, CEO | ||
| GHS: | GHS Investments, LLC | |
| Date: December 1, 2025 | By | /s/ Sarfraz Hajee |
| Sarfraz Hajee, Member | ||
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EXHIBIT A
Securities Purchase Agreement dated March 21, 2025
[See Attached]
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Exhibit 10.18
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this “Agreement”) is made as of this 30th day of October, 2025 (the “Effective Date”), by and between IIOT-OXYS, Inc., a Nevada corporation (the “Seller”), and GHS Investments, LLC a Nevada Limited Liability Corporation (the “Buyer”). Each of the Seller and the Buyer shall be referred to herein as a “Party” and, together, the “Parties.”
RECITALS
WHEREAS, the Buyer GHS Investments, Inc. (“GHS”), is a creditor and shareholder of the Seller;
WHEREAS, on July 29, 2020, November 19, 2020, December 16, 2020, December 21, 2021, February 8, 2022, March 25, 2022, November 17, 2022, August 29, 2023, April 24, 2024, October 4, 2024, March 21, 2025, April 11, 2025, and May 14, 2025, the Seller issued to GHS Securities in the aggregate principal amount of $943,800 (the “Securities”) and a “Triggering Event,” as defined in each of the Certificates of Designation of Preferences, Rights and Limitations on each of the Securities has occurred which provides GHS with a voluntary redemption right (the “Redemption Rights”);
WHEREAS, despite having Redemption Rights, GHS has not exercised them;
WHEREAS, on May 14, 2025, the Seller entered into an extension of that certain $75,000 Note between the Seller and the Buyer, pursuant to which the Maturity Date for the Note was extended until October 29, 2025 and all prior Events of Default relating to the Note were waived by GHS;
WHEREAS, on October 29, 2025, the Seller entered into an extension of that certain $75,000 Note between the Seller and the Buyer, pursuant to which the Maturity Date for the Note was extended until April 29, 2026 and all prior Events of Default relating to the Note were waived by GHS;
WHEREAS, at the time of the extensions above, it was contemplated that GHS or an affiliate would receive a controlling interest in the Seller as consideration for entering into the Note extensions and other valuable consideration recited herein; and
WHEREAS, the Seller wishes to sell and the Buyer wishes to purchase one hundred (100) shares (the “Series A Preferred Stock”) of the Seller’s Series A Supervoting Preferred Stock (the “Shares”) which, at Closing, will constitute a controlling interest in the Seller, for the Note extensions and consideration recited above and on the terms and subject to the conditions set forth below.
AGREEMENT
NOW THEREFORE, in consideration of the covenants and conditions set forth herein, the Parties agree as follows:
1. Issuance of Shares. Subject to the terms and conditions of this Agreement, at the Closing (as defined in Section 2 herein), the Seller shall issue, convey, transfer, and assign, upon the terms and conditions hereinafter set forth, to Buyer, free and clear of all liens, pledges, claims, and encumbrances of every kind, nature and description, and Buyer shall purchase and accept from the Seller the Shares.
2. Closing. The consummation of the issuance of the Shares contemplated herein (the “Closing”) shall take place at such time and place as the Buyer and the Seller agree upon orally or in writing. The date upon which the Closing occurs is referred to herein as the “Closing Date.”
3. Representations and Warranties of the Seller. The Seller represents and warrants to the Buyer as of the date hereof (which representations and warranties shall survive the Closing as provided in Section 11.1 of this Agreement) as follows to the best of its knowledge:
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3.1Authority. The Seller has all requisite power, right and authority to enter into this Agreement and the documents contemplated hereby (the “Transaction Documents”) to which it is a party, to consummate the transactions contemplated hereby and thereby, and to sell and transfer the Shares without the consent or approval of any other person, corporation, partnership, joint venture, organization, other entity or governmental or regulatory authority (“Person”). The Seller has taken, or will take prior to the Closing, all actions necessary for the authorization, execution, delivery and performance of this Agreement and the other Transaction Documents.
3.2Enforceability. This Agreement has been, and the other Transaction Documents to which the Seller is a party on the Closing Date will be, duly executed and delivered by the Seller, and this Agreement is, and each of the other Transaction Documents to which they are a party on the Closing will be, the legal, valid and binding obligation of the Seller, enforceable against the Seller in accordance with their terms.
3.3No Approvals or Notices Required; No Conflicts. Except as provided on Schedule 3.3, the execution, delivery and performance of this Agreement and the other Transaction Documents by the Seller, and the consummation of the transactions contemplated hereby and thereby, will not (a) constitute a violation (with or without the giving of notice or lapse of time, or both) of any provision of any law, judgment, decree, order, regulation or rule of any court, agency or other governmental authority applicable to the Seller, (b) require any consent, approval or authorization of, or declaration, filing or registration with, any Person, (c) result in a default (with or without the giving of notice or lapse of time, or both) under, acceleration or termination of, or the creation in any party of the right to accelerate, terminate, modify or cancel, any agreement, lease, note or other restriction, encumbrance, obligation or liability to which the Seller is a party or by which it is bound or to which any assets of the Seller are subject, or (d) result in the creation of any lien or encumbrance upon the assets of the Seller, or upon the Shares or other securities of the Seller.
3.4Voting Control of the Seller. As of the Closing Date, the Shares constitute a majority of the voting control of the Seller.
3.5Full Disclosure. No information furnished by or on behalf of the Seller to the Buyer or its representatives in connection with this Agreement or the transactions contemplated by this Agreement is false or misleading. In connection with such information and with this Agreement and the transactions contemplated hereby, the Seller has not made any untrue statement of financial or material fact or omitted to state a fact necessary in order to make the statements made or information delivered, in the light of the circumstances under which they were made or delivered, not misleading.
3.3No Broker. No broker, finder or other financial consultant has acted on behalf of the Seller in connection with this Agreement. The Seller shall indemnify and hold Buyer harmless from any brokers, finders or other consultants fees or commissions incurred or accrued in connection with this Agreement or the transactions contemplated by this Agreement by the Seller.
4. Representations and Warranties of Buyer. The Buyer represents and warrants to the Seller as follows to the best of its knowledge:
4.1Authority. The Buyer has full power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder. This Agreement constitutes a valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, and the Transaction Documents to which the Buyer is a party, when executed and delivered by the Buyer, will constitute valid and binding obligations of the Buyer, enforceable against the Buyer in accordance with their respective terms.
4.2No Conflict. The execution, delivery and performance of this Agreement and/or the Transaction Documents by the Buyer and the consummation of the transactions contemplated hereby or thereby by the Buyer will not (a) violate, conflict with, result in any breach of, or constitute a default (or an event that, with notice or lapse of time or both, would constitute a default) under any contract or judgment to which the Buyer is a party or by which it is bound, or (b) violate any applicable law, statute, rule, ordinance or regulation of any governmental body.
4.3Securities Law Representations and Warranties. The Buyer has been advised that the issuance of the Shares is not registered under the Securities Act of 1933, as amended (the “Act”), or applicable state securities laws, but are being sold pursuant to exemptions from such laws, and that the Seller’s reliance upon such exemptions is predicated in part on the Buyer’s representations contained herein. The Buyer acknowledges that the Seller is relying, in part, upon the Buyer’s representations and warranties contained herein for the purpose of qualifying the issuance of the Shares for applicable exemptions from registration or qualification pursuant to federal or state securities laws, rules and regulations.
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4.3.1Acquired Entirely for Own Account. The Shares will be acquired for the Buyer’s own account, not as a nominee or agent, and not with a view to distributing all or any part thereof. The Buyer has no present intention of selling, granting any participation in or otherwise distributing any of the Common Stock in a manner contrary to the Act or any applicable state securities law. The Buyer does not have any contract, undertaking, agreement or arrangement with any Person to sell, transfer or grant participation to such person or to any third person with respect to any of the Shares.
4.3.2Due Diligence. The Buyer has been solely responsible for its own due diligence investigation of the Seller and its business, and its analysis of the merits and risks of the investment made pursuant to this Agreement, and are not relying on anyone else’s analysis or investigation of the Seller, its business or the merits and risks of the Shares other than professional advisors employed specifically by the Buyer to assist the Buyer.
4.3.3Access to Information. The Buyer believes it has been given access to full and complete information regarding the Seller, including, in particular, the current financial condition and lack of tangible assets of the Seller and the risks associated therewith, and has utilized such access to its satisfaction for the purpose of obtaining information about the Seller; particularly, the Buyer has either attended or been given reasonable opportunity to attend a meeting with management of the Seller, for the purpose of asking questions of, and receiving answers from, such persons concerning the terms and conditions of the issuance of the Shares and to obtain any additional information, to the extent reasonably available, necessary to verify the accuracy of information provided to the Seller about the Seller. No such investigation, however, shall qualify in any respect the representations and warranties of the Seller in this Agreement.
4.3.4Sophistication. The Buyer, either alone or with the assistance of its professional advisors, is a sophisticated investor, is able to fend for itself in the transactions contemplated by this Agreement, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Shares.
4.3.5Suitability. The investment in the Shares is suitable for the Buyer based upon its investment objectives and financial needs, and the Buyer has adequate net worth and means for providing for their current financial needs and contingencies and has no need for liquidity of investment with respect to the Shares. The Buyer’s overall commitment to investments that are illiquid or not readily marketable is not disproportionate to its net worth, and investment in the Shares will not cause such overall commitment to become excessive.
4.3.6Professional Advice. The Buyer has obtained, to the extent it deems necessary, its own professional advice with respect to the risks inherent in the investment in the Shares, the condition of the Seller and the suitability of the investment in the Shares in light of the Buyer’s financial condition and investment needs.
4.3.7Ability to Bear Risk. The Buyer is in a financial position to purchase and hold the Shares and is able to bear the economic risk and withstand a complete loss of its investment in the Shares.
4.3.8Accredited Investor. The Buyer is an “accredited investor” within the meaning of Rule 501(a)(3) of Regulation D promulgated under the Act.
4.3.9Restricted Securities. The Buyer realizes that (a) the Shares have not been registered under the Act, are characterized under the Act as “restricted securities” and, therefore, cannot be sold or transferred unless subsequently registered under the Act or an exemption from such registration is available, and (b) there is presently a limited public market for the Shares and the Buyer would most likely not be able to liquidate its investment in the event of an emergency or to pledge the Shares as collateral security for loans. The Buyer’s financial condition is such that it is unlikely that the Buyer would need to dispose of any of the Shares in the foreseeable future. In this connection, the Buyer represents that it is familiar with Rule 144 of the SEC, as presently in effect, and understands the resale limitations imposed thereby and by the Act.
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5. Conditions Precedent to Buyer’s Obligations. The Buyer’s obligations under this Agreement are subject to the satisfaction of each of the following conditions, each of which is material, for the sole benefit of the Buyer and may be waived only in writing by the Buyer:
5.1Representations and Warranties. The representations of the Seller contained in Section 3 of this Agreement shall be true on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.
5.2Performance of Agreements. The Seller shall have duly performed and complied with all covenants and obligations contained in this Agreement or any other Transaction Document that are required to be performed or complied with by them on or before the Closing Date.
5.3Delivery of Certificates. Unless issued in book entry form, the Seller shall have delivered to the Buyer a certificate or certificates representing the Shares, duly endorsed for transfer on the Seller’s books or electronic certificates.
5.4Due Diligence. The results of the Buyer’s due diligence investigation of the Seller and the Seller as it relates to the Shares shall be satisfactory in all respects to the Buyer.
5.5No Adverse Changes. From the Effective Date to the Closing Date, there shall not have been any material adverse change in (a) the business, operations, assets, liabilities, earnings, condition (financial or otherwise) or prospects of the Seller or (b) with respect to the Seller and the Shares, and no material adverse change shall have occurred (or be threatened) in any domestic or foreign laws affecting the Seller or in any third party contractual or other business relationships of the Seller.
5.6Board Appointments and Resignations. The Board of Directors of the Seller shall have appointed Mark Grober, Matthew Schissler and Sarfraz Hajee as directors of the Seller effective as of the Closing Date and resignations from Vidhyadhar Mitta as director and Karen McNemar from all officer positions shall have been received effective as of the Closing Date.
5.7Consents. All Parties have obtained all governmental, shareholder, board of director and third-party consents and approvals which may be required in order to complete the transactions proposed herein.
5.8Buyer Consulting Agreement. The Seller and Buyer shall have entered into a consulting agreement satisfactory to both Parties.
5.8No Threatened Litigation. There exists no pending or threatened litigation or any contractual or regulatory obligations against the Seller which would have a material adverse effect upon the Seller or its operations, or regarding the Shares.
5.9Conversion of Seller Debt to Equity. All notes, either secured or not, of the Seller are converted to equity securities of the Seller; however, all preferred shares issued for debt shall be convertible at a fixed price and shall provide the Seller with voluntary redemption. All security/collateralization of assets by third parties against the Seller assets shall be released.
5.10Conversion of Seller Payables to Equity. Unless waived by the Buyer in writing prior to Closing, all payables and accrued payroll of the Seller are either paid in full or satisfied from the balance sheet through the issuance of equity with all preferred shares issued convertible at a fixed price and shall provide the Seller with voluntary redemption.
5.11Ownership of Series A Preferred Shares. All shares of Series A Preferred Stock are cancelled except for the Shares.
6. Conditions to the Seller’s Obligations. The Seller’s obligations under this Agreement are subject to the satisfaction of the following conditions:
6.1Representations and Warranties. The representations of the Buyer contained in Section 4 of this Agreement shall be true on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date.
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6.2Performance of Agreements. Buyer shall have duly performed and complied with all covenants and obligations contained in this Agreement on or before the Closing Date.
6.3Consents. All Parties have obtained all governmental, shareholder, board of director and third-party consents and approvals which may be required in order to complete the transactions proposed herein.
6.4Buyer Consulting Agreement. The Seller and Buyer shall have entered into a consulting agreement satisfactory to both Parties.
6.5Prior Management Consulting Agreements. The Seller shall have entered into consulting agreements with each of Clifford L. Emmons and Karen McNemar satisfactory to the Seller, the Buyer, and Mr. Emmons and Ms. McNemar, respectively.
6.6Certificates, Permits, and Approvals. All certificates, permits and approvals that are required in connection with the Buyer’s operation of the Seller have been obtained by the Buyer.
7. Covenants.
7.1Further Action. Upon the terms and subject to the conditions hereof, each of the Parties shall (a) make promptly its respective filings, and thereafter make any other required submissions, under applicable laws with respect to the transactions contemplated hereby and shall cooperate with the opposing Party with respect to such filings and submissions and (b) use its best efforts to take, or cause to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective the transactions contemplated hereby, including, without limitation, using its best efforts to obtain all waivers, licenses, permits, consents, approvals, authorizations, qualifications and orders of governmental authorities and parties to contracts as are necessary for the consummation of the transactions contemplated hereby and to fulfill the conditions to the closing of the issuance of the Shares to the Buyer. In case at any time after the Closing Date any further action is necessary or desirable to carry out the purposes of this Agreement, each Party to this Agreement shall use its best efforts to take all such action. None of the Buyer or the Seller will undertake any course of action inconsistent with this Agreement or that would make any representations, warranties or agreements made by such party in this Agreement untrue or any conditions precedent to this Agreement unable to be satisfied at or prior to the Closing.
8. Taxes. Each of the Parties shall be responsible for the payment of all of their respective transfer, sales and use and documentary taxes, filing and recording fees and similar charges that may be payable in connection with the transactions contemplated by this Agreement.
9. Transaction Costs. Each Party shall be responsible for its own costs and expenses incurred in connection with the preparation, negotiation and delivery of this Agreement and the Transaction Documents, including but not limited to attorneys’ and accountants’ fees and expenses.
10. Attorneys’ Fees and Costs. In the event that a Party commences a legal proceeding (including arbitration pursuant to Section 12.2 of this Agreement) to enforce its rights under this Agreement, the prevailing Party shall be entitled to recover its attorneys’ fees and costs from the non-prevailing Party or Parties, including those incurred in any arbitration, bankruptcy or appeal procedure.
11. Survival and Indemnification.
11.1Survival. All representations and warranties of the Parties contained in this Agreement or in the Transaction Documents or in any certificate delivered pursuant hereto or thereto shall survive the Closing for a period of twelve (12) months after the Closing Date. The covenants and agreements of the Seller and the Buyer contained in this Agreement or in the Transaction Documents shall survive the Closing and shall continue until all obligations with respect thereto shall have been performed or satisfied or shall have been terminated in accordance with their terms.
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11.2In General.
11.2.1The Seller shall indemnify and hold the Buyer harmless from any and all Damages resulting from (i) any breach of any representation or warranty made by the Seller in this Agreement or in any Transaction Document and (ii) any breach by the Seller of any covenant, agreement or obligation of the Seller contained in this Agreement.
11.2.2The Buyer shall indemnify and hold the Seller harmless from any and all Damages resulting from (i) any breach of any representation or warranty made by the Buyer in this Agreement or in any Transaction Document and (ii) any breach by the Buyer of any covenant, agreement or obligation of the Buyer contained in this Agreement or any Transaction Document.
11.3Claims for Indemnification. Whenever any claim shall arise for indemnification under Section 11 of this Agreement, the party seeking indemnification (the “Indemnified Party”) shall promptly notify the Party from whom indemnification is sought (the “Indemnifying Party”) of the existence of the claim and, when known, the facts constituting the basis for such claim. In the event any such claim for indemnification is made resulting from or in connection with any claim or legal proceedings by a third party, the notice to the Indemnifying Party shall specify, if known, the amount or an estimate of the amount of the liability arising from such claim. The Indemnified Party shall not settle or compromise any claim by a third party for which it is entitled to indemnification without the prior written consent of the Indemnifying Party, which consent shall not unreasonably be withheld, unless suit shall have been instituted against it and the Indemnifying Party shall not have taken control of such suit after notification as provided in Section 11.4 of this Agreement.
11.4Defense by Indemnifying Party. In connection with any claim giving rise to indemnity resulting from or arising out of any claim or legal proceeding by a person or entity who is not a party to this Agreement, the Indemnifying Party at its sole cost and expense may, upon written notice to the Indemnified Party, assume the defense of any such claim or legal proceeding if it acknowledges to the Indemnified Party in writing its obligations to indemnify the Indemnified Party with respect to all elements of such claim. The Indemnified Party shall be entitled to participate in (but not control) the defense of any such action, with its counsel and at its own expense. If the Indemnifying Party does not assume the defense of any such claim or resulting litigation within thirty (30) days after the date that notice of such claim is received from the Indemnified Party, (a) the Indemnified Party may defend against such claim or litigation, in such manner as it may deem appropriate, including, but not limited to, settling such claim or litigation, after giving notice of the same to the Indemnifying Party, on such terms as the Indemnified Party may deem appropriate, and (b) the Indemnifying Party shall be entitled to participate in (but not control) the defense of such action, with its counsel and at its own expense. If the Indemnifying Party thereafter seeks to question the manner in which the Indemnified Party defended such third party claim or the amount or nature of any such settlement, the Indemnifying Party shall have the burden to prove by a preponderance of the evidence that the Indemnified Party did not defend or settle such third party claim in a reasonably prudent manner.
12. Miscellaneous.
12.1Assignment. No Party may assign any of its rights or obligations hereunder without the prior written consent of the other Party. This Agreement shall be binding upon and inure to the benefit of the Parties and their respective heirs, legal representatives, successors and assigns.
12.2Arbitration. Any claims or disputes arising out of this Agreement which cannot be resolved amicably between the Parties shall be settled by submission to the American Arbitration Association (the “AAA”) for binding arbitration to be conducted in Las Vegas, Nevada. The arbitration shall be conducted by one (1) arbitrator mutually agreed upon by the Parties, or, if the Parties cannot agree, chosen in accordance with the AAA rules, and resolution of the dispute by such arbitrator shall be binding and conclusive upon the Parties. On prior leave of the arbitrator, the Parties may engage in limited discovery, including limited depositions. Any award made pursuant to this Section 12.2 may be entered in and enforced by any court having jurisdiction, and the parties consent and commit themselves to the jurisdiction of the courts of the State of Nevada for the purpose of the enforcement of any such award. The arbitrator shall award attorneys’ fees and costs to the substantially prevailing Party in accordance with Section 10 of this Agreement. The fees of the arbitrator shall be borne equally by the Parties except that, in the discretion of the arbitrator, any award may include a Party’s share of such fees.
12.3Entire Agreement. This Agreement embodies and constitutes the entire understanding among the Parties with respect to the transactions contemplated by this Agreement, and all prior or contemporaneous agreements, understandings, representations and statements between the Parties, oral or written, are merged into and superseded by this Agreement.
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12.4Modification and Waiver. Neither this Agreement nor any of its provisions may be modified, amended, discharged or terminated except in writing signed by the Party against which the enforcement of such modification, amendment, discharge or termination is sought, and then only to the extent set forth in such writing. No failure of a party to insist upon strict performance by the other Party of any of the terms and conditions of this Agreement shall constitute or be deemed to be a waiver of any such term or condition, or constitute an amendment or waiver of any such term or provision by course of performance, and each Party, notwithstanding any failure to insist upon strict performance, shall have the right thereafter to insist upon strict performance by the other Party of any and all of the terms and conditions of this Agreement. Any Party may, in its sole and absolute discretion, waive, only in writing, any condition set forth in this Agreement to such Party’s obligations under this Agreement which is for the sole benefit of the waiving Party, in which event the non-waiving Party or Parties shall be obligated to close the transaction upon all of the remaining terms and conditions of this Agreement.
12.5Notices. Any notice required or permitted under this Agreement shall be in writing, and shall be delivered personally or sent by first class certified mail, or by air courier, postage or other charges prepaid, to the Parties at the following addresses:
| to the Seller: |
IIOT-OXYS, Inc. c/o CEO 705 Cambridge St. Cambridge, MA, 02141 | ||
| to Buyer: |
GHS Investments, LLC c/o Managing Member 420 Jericho Turnpike, Suite 102 Jericho, NY 11753 | ||
or to such other address or addresses as the Parties may from time to time specify in writing. Notice shall be provided by air courier and shall be deemed effective upon the earlier of actual delivery to the recipient or six (6) days after the date on which such notice was delivered to the courier service. If notice is sent in any manner other than as provided by this Section 12.5, notice shall be deemed received when actually received by the Party to whom the notice was delivered.
12.6Governing Law; Severability. This Agreement shall be governed for all purposes by the laws of the State of Nevada applicable to agreements executed and to be wholly performed in Nevada . Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and whenever there is any conflict between any provision contained in this Agreement and any present or future statute or law, ordinance or regulation or judicial ruling or governmental decision with the force of law contrary to which the parties have no legal right to contract, the latter shall prevail, but the provision of the Agreement which is affected shall be limited only to the extent necessary to bring it within the requirements of such law, ruling or decision without invalidating or affecting the remaining provisions of the Agreement.
12.7Counterparts. This Agreement may be executed in counterparts, each of which shall be an original, but such documents shall constitute one and the same document.
12.8Contract Interpretation. The Parties acknowledge that they have caused this Agreement to be reviewed and approved by legal counsel of their own choice. This Agreement has been specifically negotiated, and any presumption that an ambiguity contained in this Agreement shall be construed against the Party that caused this Agreement to be drafted shall not apply to the interpretation of this Agreement.
12.9Other Parties. Nothing contained in this Agreement shall be construed as giving any Person, firm, corporation or other entity, other than the Parties to this Agreement and their successors and permitted assigns, any right, remedy or claim under or in respect of this Agreement or any term or condition contained in this Agreement.
12.10Incorporation by Reference. All attached exhibits and schedules are incorporated as terms of this Agreement by this reference.
[Signature page follows]
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IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their respective representatives hereunto authorized as of the day and year first above written.
| THE SELLER: | ||
| IIOT-OXYS, Inc. | ||
| By: | /s/ Clifford L. Emmons | |
| Clifford L. Emmons, CEO | ||
| THE BUYER: | ||
| GHS Investments, LLC | ||
| By: | /s/ Mark Grober | |
| Mark Grober, Managing Member | ||
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Exhibit 10.19
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement (this “Agreement”) is dated as of March 6, 2026, between IIOT-OXYS, Inc., a Nevada corporation (the “Company”), and the purchaser identified on the signature page hereto (including its successors and assigns, the “Purchaser”).
WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchaser, and the Purchaser desires to purchase from the Company, securities of the Company as more fully described in this Agreement.
NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchaser agrees as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions. In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have the meanings given to such terms in the Certificate of Designation (as defined herein), and (b) the following terms have the meanings set forth in this Section 1.1:
“Acquiring Person” shall have the meaning ascribed to such term in Section 4.5.
“Action” shall have the meaning ascribed to such term in Section 3.1(j). “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.
“Board of Directors” means the board of directors of the Company.
“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Certificate of Designation” means the Certificate of Designation to be filed prior to the Closing by the Company with the Secretary of State of the State of Nevada, in the form of Exhibit A attached hereto.
“Closing Date” means the Trading Day on which all of the Transaction Documents have been executed and delivered by the applicable parties thereto in connection with a particular Closing, and, to the extent applicable, all conditions precedent to (i) the Purchaser’s obligations to pay the Subscription Amount as to the Closing and (ii) the Company’s obligations to deliver the Securities as to the Closing, in each case, have been satisfied or waived.
“Closing” means the closing(s) of the purchase and sale of the Securities pursuant to Section 2.1, which shall occur on each Closing Date. The Initial Closing will be for the purchase of forty-three (43) Preferred Shares at the aggregate purchase price of $43,000, plus four (4) Preferred Shares issued as an Equity Incentive, for a total delivery of forty-seven (47) Preferred Shares. There will be one (1) additional Closing for forty-five (45) Preferred Shares at the purchase price of $45,000, plus five (5) Preferred Shares issued as an Equity Incentive, for a total delivery of fifty (50) Preferred Shares, which shall occur upon the filing of the Company's Annual Report on Form 10-K for the period ended December 31, 2025 ("Additional Closing"). The Additional Closing shall occur at the Investor's discretion.
“Commission” means the United States Securities and Exchange Commission. “Common Stock” means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
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“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
“Company Counsel” means Business Legal Advisors, LLC.
“Conversion Shares” means the Common Stock issuable upon conversion of the Preferred Stock.
“Disclosure Schedules” shall have the meaning ascribed to such term in Section 3.1.
“Dividend” means twelve percent (12%) per annum of the stated value of any purchased Preferred Share, paid quarterly by the Company, and at the Company’s discretion, in cash or in Preferred Stock.
“Equity Conditions” means (i) the Company shall cure any Events of Default under existing agreements within ten (10) calendar days from the execution of this Agreement.
“Equity Incentive" means the Company shall issue four (4) shares of Preferred Stock at the Initial Closing and five (5) shares of Preferred Stock at the Additional Closing to the Investor as further inducement and consideration for entering into the Closings.
“Evaluation Date” shall have the meaning ascribed to such term in Section 3.1(r).
“Event of Default” means any of the following events: (i) the suspension of the Common Stock from trading on the Trading Market for a period of two (2) consecutive Trading Days; (ii) the delisting of the Common Stock from the Trading Market; (iii) the failure for any reason by the Company or its transfer agent to issue any shares of Common Stock issuable upon the conversions of Preferred Stock within three (3) Trading Days after the date on which the Purchaser is entitled to receive such shares; (iv) the Company breaches any representation, warranty, covenant or other term or condition contained in this Agreement; (v) the Company files for, or is compelled to bankruptcy, insolvency or receivership; (vi) if at any time the Common Stock is no longer DWAC eligible; (vii) with exception of the Annual Report on Form 10-K for the period ended December 31, 2025 (which shall have a 30 day grace period from the extended filing deadline), the Company fails to make timely disclosures of its quarterly or annual filings or any filings or disclosures required by the SEC, a state or the Trading Market; (viii) issuance of any convertible securities or debts without redeeming any outstanding Preferred Shares; or (ix) the Company fails to redeem any outstanding Preferred Shares when due.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
“GAAP” means generally accepted accounting principles in the U.S.
“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).
“Liens” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.
“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).
“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
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“Preferred Stock” means up toninety-seven (97) shares of the Company’s Series D Convertible Preferred Stock issued hereunder having the rights, preferences and privileges set forth in the Certificate of Designation, in the form of Exhibit A hereto.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.
“Qualified Offering” means a bank underwritten financing transaction resulting in net proceeds to the Company of at least $1,000,000 within twelve (12) calendar months from the issuance of the Preferred Stock. Upon the consummation of a Qualified Offering, the Investor in its discretion, shall have the option to convert the Preferred Stock into the securities offered in the Qualified Offering at a thirty percent (30%) discount to the effective issuance price of the Qualified Offering.
“Registration Statement” means any Registration Statement under which the shares of the Company’s common stock are registered.
“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).
“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(g).
“Securities” means the Preferred Stock, the Conversion Shares and any common or Preferred Stock issuable hereunder.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Short Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to include the location and/or reservation of borrowable shares of Common Stock).
“Stated Value” means $1,200 per share of Preferred Stock.
“Subscription Amount” shall mean the aggregate amount to be paid for the Preferred Stock purchased hereunder as specified on the signature page under the heading “Subscription Amount,” in United States dollars and in immediately available funds.
“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and shall, where applicable, also include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.
“Trading Day” means a day on which the principal Trading Market is open for trading.
“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB or the OTC Markets (or any successors to any of the foregoing).
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“Transaction Documents” means this Agreement, the Certificate of Designation, all exhibits and schedules thereto and hereto and any other documents or agreements executed in connection with the transactions contemplated hereunder.
“Transfer Agent” means Issuer Direct, the current transfer agent of the Company, with a mailing address of 1981 East 4800 South, Suite 100, Salt Lake City, UT 84117, and any successor transfer agent of the Company.
ARTICLE II.
PURCHASE AND SALE
2.1 Closings. Upon the terms and subject to the conditions set forth herein, substantially concurrent with the execution and delivery of this Agreement by the parties hereto, the Company agrees to sell, and the Purchaser agrees to purchase, forty three (43) shares of Preferred Stock at a price of $1,000 per share of Preferred Stock ($43,000 in total Purchase Price), plus four (4) shares of Preferred Stock as an Equity Incentive (for a total of forty-seven (47) shares at the Initial Closing), and one (1) additional Closing for forty-five (45) Preferred Shares at the Purchase Price of $45,000, plus five (5) shares of Preferred Stock as an Equity Incentive (for a total of fifty (50) shares at the Additional Closing), which Additional Closing shall at the Investor's discretion, occur upon the filing of the Company's Annual Report on Form 10-K for the period ended December 31, 2025 (the shares purchased for cash, the "Purchased Shares"). The Purchaser shall deliver to the Company, via wire transfer immediately available funds equal to the Purchaser's Subscription Amount as set forth on the signature page hereto executed by the Purchaser for each Closing, and the Company shall deliver to the Purchaser the applicable number of shares of Preferred Stock (including both Purchased Shares and Equity Incentive shares) as determined pursuant to Section 2.2(a). Upon satisfaction of the covenants and conditions set forth in Sections 2.2 and 2.3, each Closing shall occur at the offices of Company Counsel or such other location as the parties shall mutually agree.
2.2 Deliveries.
(a) On or prior to each Closing Date (or as otherwise indicated below), the Company shall deliver or cause to be delivered to the Purchaser the following:
(i) This Agreement duly executed by the Company;
(ii) Certificates evidencing shares of Preferred Stock, representing the Purchased Shares for the respective Closing (unless issued in book-entry form) together with the Equity Incentive; and
(iii) An irrevocable letter of instruction to the Company's Transfer Agent, instructing the Transfer Agent to maintain for the benefit of the Purchaser, initially one hundred and fifty million (150,000,000) shares of its common stock and at all times thereafter two times (2x) the number of common shares needed to by the Purchaser to convert all shares of Preferred Stock held by the Purchaser.
(b) On or prior to each Closing Date, the Purchaser shall deliver or cause to be delivered to the Company, as applicable, the following:
(i) This Agreement duly executed by the Purchaser; and
(ii) the Purchaser’s Subscription Amount by wire transfer to the account specified in writing by the Company together with the subscription form attached as an Exhibit below.
2.3 Closing Conditions.
(a) The obligations of the Company hereunder in connection with each Closing are subject to the following conditions being met:
(i) the accuracy in all material respects on the applicable Closing Date of the representations and warranties of the Purchaser contained herein (unless as of a specific date therein in which case they shall be accurate as of such date);
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(ii) all obligations, covenants and agreements of the Purchaser required to be performed at or prior to the applicable Closing Date shall have been performed; and
(iii) the delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.
(b) The obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:
(i) the accuracy in all material respects when made and on the applicable Closing Date of the representations and warranties of the Company contained herein (unless as of a specific date therein);
(ii) all obligations, covenants and agreements of the Company required to be performed at or prior to the applicable Closing Date shall have been performed;
(iii) the delivery by the Company of the items set forth in Section 2.2(a) of this Agreement;
(iv) there shall have been no Material Adverse Effect with respect to the Company since the date hereof; and
(v) from the date hereof to the applicable Closing Date, trading in the Common Stock shall not have been suspended by the Commission or the Company’s principal Trading Market and, at any time prior to the applicable Closing Date, trading in securities generally as reported by Bloomberg L.P. shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported by such service, or on any Trading Market, nor shall a banking moratorium have been declared either by the United States or New York State authorities nor shall there have occurred any material outbreak or escalation of hostilities or other national or international calamity of such magnitude in its effect on, or any material adverse change in, any financial market which, in each case, in the reasonable judgment of the Purchaser, makes it impracticable or inadvisable to purchase the Securities at the Closing.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. Except as set forth in the Disclosure Schedules, which Disclosure Schedules shall be deemed a part hereof and shall qualify any representation or otherwise made herein to the extent of the disclosure contained in the corresponding section of the Disclosure Schedules, the Company hereby makes the following representations and warranties to the Purchaser as of the date hereof, the date of the initial Closing pursuant to Section 2.1:
(a) Subsidiaries. All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a). The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary, and all of the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non- assessable and free of preemptive and similar rights to subscribe for or purchase securities. If the Company has no subsidiaries, all other references to the Subsidiaries or any of them in the Transaction Documents shall be disregarded.
(b) Organization and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.
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(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by this Agreement and each of the other Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of this Agreement and each of the other Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and each other Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(d) No Conflicts. The execution, delivery and performance by the Company of this Agreement and the other Transaction Documents to which it is a party, the issuance and sale of the Securities and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company has filed all quarterly and annual reports required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). The Company has delivered to Purchaser true and complete copies of the SEC Documents, except for such exhibits and incorporated documents, and except as such Documents are available EDGAR filings on the SEC’s sec.gov website. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to September 30, 2025, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act. For the avoidance of doubt, filing of the documents required in this Section 3(g) via the SEC’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”) shall satisfy all delivery requirements of this Section 3(g).
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The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) the filings required pursuant to Section 4.4 of this Agreement, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities, and (iii) such filings as are required to be made under applicable state and federal securities laws (collectively, the “Required Approvals”).
(f) Issuance of the Securities. The Preferred Stock is duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents. The Conversion Shares, when issued in accordance with the terms of the Preferred Stock, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The Company shall reserve from its duly authorized capital stock a number of shares of Common Stock issuable pursuant to the Preferred Stock.
(g) Capitalization. The capitalization of the Company is as set forth on Schedule 3.1(g), which Schedule 3.1(g) shall also include the number of shares of Common Stock owned beneficially, and of record, by Affiliates of the Company as of the date hereof. Except as set forth on Schedule 3.1(g), the Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act (“SEC Reports”). No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as set forth on Schedule 3.1(g) and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.
(h) Intentionally omitted.
(i) Intentionally omitted.
(j) Litigation. Except as disclosed in Schedule 3.1(j), there is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.
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(k) Labor Relations. Except as disclosed in Schedule 3.1(k), no labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived) except as disclosed in Schedule 3.1(l), (ii) is in violation of any judgment, decree or order of any court, arbitrator or other governmental authority, except as set forth on Schedule 3.1(l) or (iii) is or has been in violation of any statute, rule, ordinance or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, other than tax payments related to payroll that are late, environmental protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.
(m) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.
(n) Title to Assets. Except as disclosed in Schedule 3.1(n), the Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal, state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.
(o) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”). Except as disclosed on Schedule 3.1(o), none of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2) years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
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(p) [Reserved].
(q) Transactions with Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, providing for the borrowing of money from or lending of money to or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case in excess of $50,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan of the Company. Except as set forth on Schedule 3.1(q), all employee salaries and contractor fees have been paid to date and no such amounts are outstanding or past due.
(r) Sarbanes-Oxley; Internal Accounting Controls. Except as may be disclosed in the SEC Reports, the Company and the Subsidiaries are in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that are effective as of the date hereof and as of each Closing Date. Except as disclosed in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal control over financial reporting of the Company and its Subsidiaries.
(s) Certain Fees. The Company has or shall engage a suitable Investment Banker in conjunction with the transaction contemplated herein. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiary to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents, other than as set forth on Schedule 3.1(s). The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.
(t) Private Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.
(u) Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject to registration under the Investment Company Act of 1940, as amended.
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(v) Registration Rights. Except for Sergey Gogin, a holder of senior secured debt of the Company, and the Purchaser, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company or any Subsidiary.
(w) Listing and Maintenance Requirements. The Company has not in the twelve (12) months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.
(x) [RESERVED]
(y) Disclosure. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that neither it nor any other Person acting on its behalf has provided the Purchaser or its agents or counsel with any information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company. All of the disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company and its Subsidiaries, their respective businesses and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees that the Purchaser does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.
(z) No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.
(aa) Tax Status. Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know of no basis for any such claim. Immediately after closing of this transaction, the Company covenants to pay to the Past Due Taxes.
(bb) No General Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising. The Company has offered the Securities for sale only to the Purchaser.
(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any provision of FCPA.
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(dd) Accountants. The Company’s accounting firm is set forth on Schedule 3.1(dd) of the Disclosure Schedules. To the knowledge and belief of the Company, such accounting firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect to the financial statements to be included in the Company’s Annual Report for the year ended December 31, 2024.
(ee) Acknowledgment Regarding Purchaser’s Purchase of Securities. The Company acknowledges and agrees that the Purchaser is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated thereby. The Company further acknowledges that the Purchaser is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the Transaction Documents and the transactions contemplated thereby and any advice given by the Purchaser or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated thereby is merely incidental to the Purchaser’s purchase of the Securities. The Company further represents to the Purchaser that the Company’s decision to enter into this Agreement and the other Transaction Documents has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.
(ff) Acknowledgment Regarding Purchaser’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding, it is understood and acknowledged by the Company that: (i) the Purchaser has not been asked by the Company to agree, nor has the Purchaser agreed, to desist from purchasing or selling, securities of the Company, or “derivative” securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open market or other transactions by the Purchaser, specifically including, without limitation, “derivative” transactions, before or after a closing of this or future private placement transactions, may negatively impact the market price of the Company’s publicly-traded securities (iii) Omit and (iv) the Purchaser shall not be deemed to have any affiliation with or control over any arm’s length counter-party in any “derivative” transaction. The Company further understands and acknowledges that (y) the Purchaser may engage in hedging activities at various times during the period that the Securities are outstanding, and (z) such hedging activities (if any) could reduce the value of the existing stockholders’ equity interests in the Company at and after the time that the hedging activities are being conducted. The Company acknowledges that such aforementioned hedging activities do not constitute a breach of any of the Transaction Documents.
(gg) Regulation M Compliance. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s placement agent in connection with the placement of the Securities.
(hh) Reserved.
(ii) Stock Option Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results or prospects.
(jj) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).
(kk) U.S. Real Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon Purchaser’s request.
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(ll) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve.
(mm) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial record- keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened.
3.2 Representations and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the initial and any additional Closing Date to the Company as follows (unless as of a specific date therein):
(a) Organization; Authority. The Purchaser is either an individual or an entity duly incorporated or formed, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents have been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, on the part of the Purchaser. Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.
(b) Own Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws).
(c) Purchaser Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is and on each date on which it converts any shares of Preferred Stock, either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a) under the Securities Act.
(d) Experience of the Purchaser. The Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. The Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(e) General Solicitation. The Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.
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The Company acknowledges and agrees that the representations contained in Section 3.2 shall not modify, amend or affect the Purchaser’s right to rely on the Company’s representations and warranties contained in this Agreement or any representations and warranties contained in any other Transaction Document or any other document or instrument executed and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.
ARTICLE IV.
OTHER AGREEMENTS OF THE PARTIES
4.1 Transfer Restrictions.
(a) The Securities may only be disposed of in compliance with state and federal securities laws. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights and obligations of the Purchaser under this Agreement.
(b) The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.
The Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are registered under a registration statement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of selling stockholders thereunder.
(c) Certificates evidencing the Conversion Shares shall not contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale of such security is effective under the Securities Act, (ii) following any sale of such Conversion Shares pursuant to Rule 144, (iii) if such Conversion Shares are eligible for sale under Rule 144 without volume or manner-of-sale restrictions, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission). If all or any shares of Preferred Stock are converted at a time when there is an effective registration statement to cover the resale of the Conversion Shares, or if such Conversion Shares may be sold under Rule 144 and the Company is then in compliance with the current public information required under Rule 144, or if the Conversion Shares may be sold under Rule 144 without the requirement for the Company to be in compliance with the current public information required under Rule 144 as to such Conversion Shares and without volume or manner-of-sale restrictions or if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission) then such Conversion Shares shall be issued free of all legends. The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than the earlier of (i) two (2) Trading Days and (ii) the number of Trading Days comprising the Standard Settlement Period (as defined below) following the delivery by a Purchaser to the Company or the Transfer Agent of a certificate representing Conversion Shares, issued with a restrictive legend (such date, the “Legend Removal Date”), deliver or cause to be delivered to such Purchaser a certificate representing such shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set forth in this Section 4. Certificates for Conversion Shares subject to legend removal hereunder shall be transmitted by the Transfer Agent to the Purchaser by crediting the account of the Purchaser’s prime broker with the Depository Trust Company System as directed by such Purchaser. As used herein, “Standard Settlement Period” means the standard settlement period, expressed in a number of Trading Days, on the Company’s primary Trading Market with respect to the Common Stock as in effect on the date of delivery of a certificate representing Conversion Shares, issued with a restrictive legend.
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(d) In addition to such Purchaser’s other available remedies, (i) the Company shall pay to a Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of the value of the Conversion shares for which the Preferred Stock is being converted, $10 per Trading Day for each Trading Day after the Legend Removal Date (increasing to $20 per Trading Day after the fifth Trading Day) until such certificate is delivered without a legend. Nothing herein shall limit such Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and such Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief, and (ii) if after the Legend Removal Date such Purchaser purchases (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by such Purchaser of all or any portion of the number of shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion of the number of shares of Common Stock that such Purchaser anticipated receiving from the Company without any restrictive legend, then, the Company shall pay to such Purchaser, in cash, an amount equal to the excess of such Purchaser’s total purchase price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including brokerage commissions and other out-of-pocket expenses, if any) (the “Buy-In Price”) over the product of the highest closing sale price of the Common Stock on any Trading Day during the period commencing on the date of the delivery by such Purchaser to the Company of the applicable Preferred Stock and ending on the date of such delivery and payment under this Section 4.1(d).
(e) In the event a Purchaser shall request delivery of unlegended shares as described in this Section 4.1 and the Company is required to deliver such unlegended shares, (i) it shall pay all fees and expenses associated with or required by the legend removal and/or transfer including but not limited to legal fees, Transfer Agent fees and overnight delivery charges and taxes, if any, imposed by any applicable government upon the issuance of Common Stock; and (ii) the Company may not refuse to deliver unlegended shares based on any claim that such Purchaser or anyone associated or affiliated with such Purchaser has not complied with Purchaser’s obligations under the Transaction Documents, or for any other reason, unless, an injunction or temporary restraining order from a court, on notice, restraining and or enjoining delivery of such unlegended shares shall have been sought and obtained by the Company and the Company has posted a surety bond for the benefit of such Purchaser in the amount of the greater of (i) 150% of the amount of the aggregate purchase price of the Conversion Shares which is subject to the injunction or temporary restraining order, or (ii) the VWAP of the Common Stock on the Trading Day before the issue date of the injunction multiplied by the number of unlegended shares to be subject to the injunction, which bond shall remain in effect until the completion of the litigation of the dispute and the proceeds of which shall be payable to such Purchaser to the extent Purchaser obtains judgment in Purchaser’s favor.
4.2 Acknowledgment of Dilution of Voting Power. The Company acknowledges that the issuance of the Securities will result in dilution of the voting power of the outstanding shares of Common Stock, which dilution will be substantial.
4.3 Integration. The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.
4.4 Securities Laws Disclosure; Publicity. The Company shall file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby, including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. From and after the issuance of such report, the Company represents to the Purchasers that it shall have publicly disclosed all material, non-public information delivered to the Purchaser by the Company or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in connection with the transactions contemplated by the Transaction Documents. In addition, effective upon the issuance of such report, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement, whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, agents, employees or Affiliates on the one hand, and the Purchaser or any of its Affiliates on the other hand, shall terminate. The Company and the Purchaser shall consult with each other in issuing any press release or public disclosure with respect to the transactions contemplated by the Transaction Documents, and neither the Company nor the Purchaser shall issue any such press release nor otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication. Notwithstanding the foregoing, the Company shall not publicly disclose the name of the Purchaser, or include the name of the Purchaser in any filing with the Commission or any regulatory agency or Trading Market, without the prior written consent of the Purchaser, except: (a) as required by federal securities law in connection with the filing of final Transaction Documents with the Commission and (b) to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchaser with prior notice of such disclosure permitted under this clause (b).
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4.5 Shareholder Rights Plan. No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.
4.6 Non-Public Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it, nor any other Person acting on its behalf, will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have entered into a written agreement with the Company regarding the confidentiality and use of such information. The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in securities of the Company.
4.7 Indemnification of Purchaser. Subject to the provisions of this Section 4.7, the Company will indemnify and hold the Purchaser and their respective directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any such Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser Parties in any capacity, or any of them or their respective Affiliates, by any stockholder of the Company who is not an Affiliate of such Purchaser Party, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of such Purchaser Party’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings such Purchaser Party may have with any such stockholder or any violations by such Purchaser Party of state or federal securities laws or any conduct by such Purchaser Party which constitutes fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, such Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party. Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or such defense once started is subsequently delayed owing to lack of timely payment by the Company of legal fees and expenses or (iii) in such action there is, in the reasonable opinion of counsel, a material conflict on any material issue between the position of the Company and the position of such Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel. The Company will not be liable to any Purchaser Party under this Agreement (y) for any settlement by a Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (z) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by such Purchaser Party in this Agreement or in the other Transaction Documents. The indemnification required by this Section 4.7 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or are incurred. The indemnity agreements contained herein shall be in addition to any cause of action or similar right of any Purchaser Party against the Company or others and any liabilities the Company may be subject to pursuant to law.
4.8 Certain Transactions and Confidentiality. The Purchaser, covenants that neither it, nor any Affiliate acting on its behalf or pursuant to any understanding with it will (i) execute any Short Sales, of any of the Company’s securities during the period commencing with the execution of this Agreement and ending at such time that the transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described in Section 4.4 or (ii) from the date hereof until the earlier of the 12 month anniversary of the date hereof and the date that the Preferred Stock is no longer outstanding, execute any Short Sales of the Common Stock (a “Prohibited Short Sale”). The Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company pursuant to Section 4.4, the Purchaser will maintain the confidentiality of the existence and terms of this transaction and the information included in the Transaction Documents and the Disclosure Schedules. Notwithstanding the foregoing, and notwithstanding anything contained in this Agreement to the contrary, the Company expressly acknowledges and agrees that (i) the Purchaser does not make any representation, warranty or covenant hereby that it will not engage in effecting transactions in any securities of the Company after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to Section 4.4, (ii) except for a Prohibited Short Sale, the Purchaser shall not be restricted or prohibited from effecting any transactions in any securities of the Company in accordance with applicable securities laws from and after the time that the transactions contemplated by this Agreement are first publicly announced pursuant to Section 4.4 and (iii) the Purchaser shall have no duty of confidentiality to the Company or its Subsidiaries after the issuance of the public disclosure as described in Section 4.4.
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4.9 Form D; Blue Sky Filings. The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of the Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of the Purchaser.
4.10 Redemption.
The Company shall have the right to redeem the Securities, in accordance with the terms of the Certificate of Designation.
4.11 Dividends The Company shall pay a dividend of twelve percent (12%) per annum on any purchased Preferred Shares, for as long as the relevant Preferred Shares have not been redeemed or converted. Dividends shall be paid quarterly, and at the Company’s discretion, in cash or Preferred Stock calculated at the purchase price.
4.12 Registration Rights The Purchased Shares shall carry registration rights as described in the Certificate of Designation.
4.13 Event of Default Following any Event of Default, all outstanding Purchased Shares shall come immediately due for redemption and the redemption amount shall accrue interest at the lesser of (a) 12% per annum or (b) the maximum legal rate. Redemption following an Event of Default shall occur at an amount equaling the product of one hundred and thirty five percent (135%), multiplied by the sum of the Stated Value, all accrued but unpaid dividends and all other amounts due pursuant to the Certificate of Designation for all Purchased Shares.
4.14 Conversion Procedures. The form of Notice of Conversion included in the Preferred Stock sets forth the totality of the procedures required of the Purchaser in order to convert the Preferred Stock. No additional legal opinion, other information or instructions shall be required of the Purchaser to convert their Preferred Stock. Without limiting the preceding sentences, no ink-original Notice of Conversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice of Conversion form be required in order to convert the Preferred Stock. The Company shall honor conversion of the Preferred Stock and shall deliver Conversion Shares in accordance with the terms, conditions and time periods set forth in the Transaction Documents.
4.14 DTC Program. For so long as the Preferred Stock is outstanding, the Company will employ as the Transfer Agent for the Common Stock a participant in the DTC Automated Securities Transfer Program and cause the Common Stock to be transferable pursuant to such program.
4.15 Most Favored Nations. From the date hereof until the date when the Purchaser no longer holds any Securities, upon any issuance by the Company or any of its subsidiaries of Common Stock, Common Stock Equivalents (except for shares issued pursuant to conversions of Series B Convertible Preferred Stock by the Purchaser) for cash consideration, indebtedness or a combination of units hereof (a “Subsequent Financing”), Purchaser may elect, in its sole discretion, to exchange (in lieu of conversion), if applicable, all or some of the Securities then held for any securities or units issued in a Subsequent Financing on a $1.00 for $1.00 basis. The Company shall provide the Purchaser with notice of any such Subsequent Financing in the manner set forth below. Additionally, if in such Subsequent Financing there are any contractual provisions or side letters that provide terms more favorable to the investors than the terms provided for hereunder, then the Company shall specifically notify the Purchaser of such additional or more favorable terms and such terms, at Purchaser’s option, shall become a part of the transaction documents with the Purchaser. The types of terms contained in another security that may be more favorable to the holder of such security include, but are not limited to, terms addressing stock sale price, price per share, collateralization or security rights and warrant coverage.
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ARTICLE V.
MISCELLANEOUS
5.1 Termination. This Agreement may be terminated by the Purchaser, as to the Purchaser’s obligations hereunder, if the Closing has not been consummated within five (5) Business Days of the date hereof; provided, however, that such termination will not affect the right of any party to sue for any breach by any other party (or parties).
5.2 Fees and Expenses. At the Closing, the Company has agreed to reimburse the Purchaser $3,000 for its legal fees in connection with the transaction contemplated by the Transaction Documents, which such amount may be withheld from the Purchaser’s Subscription Amount deliverable at Closing. Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all Transfer Agent fees (including, without limitation, any fees required for same-day processing of any instruction letter delivered by the Company), stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.
5.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
5.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second (2nd) Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the signature pages attached hereto.
5.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed, in the case of an amendment, by the Company and the holders of at least 75% in interest of the Securities then outstanding or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.
5.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
5.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom the Purchaser assigns or transfers any Securities, provided that such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions of the Transaction Documents that apply to the “Purchaser.”
5.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7 and this Section 5.8.
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5.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, partners, members, employees or agents) shall be commenced exclusively in the state or federal courts sitting in the Borough of Manhattan, New York, New York Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in the Borough of Manhattan, New York, New York for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law. If either party shall commence an action, suit or proceeding to enforce any provisions of the Transaction Documents, then, in addition to the obligations of the Company under Section 4.7, the prevailing party in such action, suit or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.
5.10 Survival. The representations and warranties contained herein shall survive each Closing and the delivery of the Securities.
5.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to each other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page was an original thereof.
5.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.
5.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) any of the other Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights.
5.14 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.
5.15 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
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5.16 Payment Set Aside. To the extent that the Company makes a payment or payments to the Purchaser pursuant to any Transaction Document or the Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.
5.17 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.
5.18 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding Business Day.
5.19 Construction. The parties agree that each of them and/or their respective counsel have reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.
5.20 WAIVER OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.
(Signature Pages Follow)
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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
| IIOT-OXYS, INC. | Address for Notice: |
| 705 Cambridge St. | |
| Cambridge, MA 02141 |
By: /s/ Clifford L. Emmons
Name: Clifford L. Emmons
Title: Chief Executive Officer
With an electronic copy to (which shall not constitute notice):
Attn: Brian Higley, Esq.
Email: brian@businesslegaladvisor.com
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
SIGNATURE PAGE FOR PURCHASER FOLLOWS]
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[PURCHASER SIGNATURE PAGE TO SECURITIES PURCHASE AGREEMENT]
IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
Name of Purchaser: GHS Investments LLC
Signature of Authorized Signatory of Purchaser: /s/ Mark Grober
Name of Authorized Signatory: Mark Grober
Title of Authorized Signatory: Member
Address for Notice to Purchaser: 420 Jericho Turnpike, Suite 102
Jericho, NY 11753
Address for Delivery of Securities to Purchaser (if not same as address for notice):
Book entry
Facsimile Number: Subscription Amount: (212) 574-3326
$43,000 (Initial Closing)
$45,000 (Additional Closing)
Total: $88,000
Subscription Date: March 10, 2026
Shares of Series D Preferred Stock:
47 (Initial Closing)
50 (Additional Closing)
Total: 97
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Exhibit A
Certificate of Designation
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[list of Disclosure Schedules: content to be provided by Company]:
(please read each section for specific content, topic below listed for convenience only)
Schedule 3.1(a) - subsidiaries
Schedule 3.1(g) - capitalization
Schedule 3.1(j) - litigation
Schedule 3.1(k) - labor disputes
Schedule 3.1(l) - compliance
Schedule 3.1(n) - title to assets
Schedule 3.1(o) -intellectual property
Schedule 3.1(p) - insurance
Schedule 3.1(s) – certain fees
Schedule 3.1(aa) - tax status
Schedule 3.1(dd) - accountants
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FORM OF CLOSING NOTICE
TO: GHS Investments, LLC
DATE:
We refer to the Securities Purchase Agreement, dated March 6, 2026 (the “Agreement”), entered into by and between IIOT-OXYS, Inc., and you. Capitalized terms defined in the Agreement shall, unless otherwise defined herein, have the same meaning when used herein.
We hereby:
| 1) | Give you notice that we require you to purchase [43/45] shares of Series D Preferred Stock [for the Initial Closing/for the Second Closing upon filing of Form 10-K for the period ended December 31, 2025]; |
| 2) | The purchase price, pursuant to the terms of the Agreement, is $1,000 per share for the Initial Closing [$43,000 total] and $1,000 per share for the Second Closing [$45,000 total]; and |
| 3) | Certify that, as of the date hereof, the conditions set forth in Section 2.3 of the Agreement, as related to the obligations of the Company, are satisfied. |
Closing will occur in accordance with the terms and conditions of Section 2 of the Agreement.
IIOT-OXYS, INC.
By: _______________________
Name: Clifford L. Emmons
Title: Chief Executive Officer
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Schedule 3.1(a)
As of the date hereof, IIOT-OXYS, Inc., a Nevada corporation, has the following material wholly owned subsidiaries:
1. OXYS Corporation, a Nevada corporation
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Schedule 3.1(g)
As of the date hereof, IIOT-OXYS, Inc., a Nevada corporation, has the following capitalization:
Common Stock
• Issued & Outstanding: 586,285,063
• Authorized: 10,000,000,000
Preferred stock
• Issued & Outstanding: 2,153
• Authorized: 10,000,000
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Schedule 3.1(p)
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Schedule 3.1(s)
J.H. Darbie & Co., Inc.
a. In consideration of the foregoing, upon consummation of the closing regarding a financing on behalf of the Issuer, directly or through a structured Transaction, Darbie will be entitled to receive a finder fee (“Finder’s Fee”) in cash equal to 4% (2% if the transaction involves GHS Investments LLC) of the gross proceeds of an equity/convertible debt transaction and/or cash equal to 3% (2% if the transaction involves GHS Investments LLC) of the gross proceeds of a non-convertible debt transaction received by the Issuer within three business days from the closing date. The Issuer and the Introduced Party will not be obligated to pay Darbie if the Issuer does not receive the Transaction Proceeds.
b. Within three days of closing the Transaction a warrant in the form, appropriately completed to reflect the following terms. The Issuer also shall pay Darbie non-callable warrants of the Issuer issuable to Darbie, or its designee simultaneously with the closing of the Transaction equal to 4% (0% if the transaction involves GHS Investments LLC) warrant coverage of the amount raised. The warrants shall entitle the holder thereof to purchase securities of the Issuer at a purchase price equal to 120% of the Introduced Party’s exercise price of the Transaction or the public market closing price of the Issuer’s common stock on the date of the Transaction, whichever is lower (such price, the “Warrant Price”). The warrants shall be exercisable immediately after the date of issuance, shall have anti-dilutive price protection, participating registration rights, and shall expire 5 years after the date of issuance. If warrants are issued to investors in a Transaction, the Darbie warrants shall have the same terms as the warrants issued to investors in the applicable Transaction, except that such Darbie warrants shall have an exercise price equal to 120% of the Warrant Price.
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Schedule 3.1(dd)
Fruci & Associates II, PLLC
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Exhibit 10.23
DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT (this “Debt Exchange Agreement”), dated as of October 30, 2025, is entered into by and between IIOT-OXYS, Inc., a Nevada corporation with its principal offices at 705 Cambridge St., Cambridge, MA 01241 (the “Company”), and the debt holder set forth on the signature page hereto (the “Debt Holder”).
WHEREAS, as of the date set forth on the signature page hereto, the Debt Holder owed certain debt by the Company (the “Debt”) in the principal amount set forth on the signature page hereto;
WHEREAS, as of the date set forth on the signature page hereto, the Debt Holder owns 7,800 shares of Series A Supervoting Preferred Stock of the Company (the “Series A Preferred Stock”);
WHEREAS, the Company and the Debt Holder desire to convert the entire Debt into the number of shares of Series E Preferred Stock of the Company set forth on the signature page hereto (the “Exchange Shares”), at the Stated Value per Exchange Share (as stated in the Certificate of Designation for the Series E Preferred Stock) and to terminate the Series A Preferred Stock.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.The Debt Exchange.
(a)Issuance of Exchange Shares; Cancellation of Indebtedness and Series A Preferred Stock. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Company shall issue the Exchange Shares to the Debt Holder in exchange for the cancellation of all indebtedness of the Company owed to the Debt Holder as evidenced by the Debt and all of the Series A Preferred Stock, and for no additional consideration (the “Debt Exchange”).
(b)General Release. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Debt Holder hereby releases, waives, discharges and relinquishes any and all rights, claims, demands, contentions and causes of action of every kind, nature, character and description whatsoever, whether known or unknown, suspected or unsuspected, apparent or concealed, fixed or contingent, arising from the Debt and Series A Preferred Stock (collectively, the “Debt Documents”) on or before the Closing Date, which it now has or hereafter may be entitled to claim against the Company, its directors, officers, managers, members, agents, attorneys, and employees (the “Released Parties”), including but without limiting the generality of foregoing, all claims arising from or in connection with or otherwise resulting from any matter, event, state of facts, claim, contention or cause whatsoever, occurring or existing in connection with or relating to the Debt Documents on or before the Closing Date (collectively, the “Claims”). The Debt Holder agrees that the waiver and release described in this Section 1(b) applies to all Claims, whether or not the Debt Holder currently knows about them or suspects that they exist. Notwithstanding anything to the contrary expressed or implied herein, however, none of the foregoing released Claims shall include any claims against a Released Party arising by reason of such Released Party’s breach of this Debt Exchange Agreement. In addition, none of the foregoing releases extend to any breach of the Debt Exchange Agreement, and no remedies for any such breach are being released herein.
(c)Fractional Exchange Shares. The Exchange Shares shall be issued in full satisfaction and payment of all indebtedness of the Company owed to the Debt Holder as evidenced by the Debt. In the event that, as a result of the Debt Exchange, fractional Exchange Shares would be required to be issued, such fractional Exchange Shares shall be rounded up or down to the nearest whole share.
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(d)Section 3(a)(9) Exchange Offer. It is the intent of the Company that the Debt Exchange be effectuated pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(9) thereunder, and that, therefore, the holding period of the Debt will, for securities law purposes, be tacked to the holding period of the Exchange Shares. In this regard, the Company covenants to use its best efforts to cause its transfer agent to issue certificates representing shares of Common Stock issued upon the conversion of the Exchange Shares (the “Conversion Shares”) without any restricted legend, and, if required by the transfer agent, to obtain an opinion of counsel addressed to the transfer agent to that effect.
2.Closing Deliveries.
(a)At the Closing, the Company shall deliver to the Debt Holder:
(i)book entry shares in the name of the Debt Holder, or the Debt Holder’s designees, representing the Exchange Shares, free and clear of all liens and encumbrances; and
(ii)such other documents, certificates or other information as the Debt Holder or its counsel may reasonably request.
(b)At the Closing, the Debt Holder shall deliver to the Company:
(i)the original Debt, for cancellation; and
(ii) such other documents, certificates or other information as the Company or its counsel may reasonably request.
3.The Closing. The closing of the Debt Exchange shall occur as the parties hereto agree upon the satisfaction of the conditions to closing set forth in Section 4 below (other than conditions to be satisfied at Closing) (the “Closing” and, the date on which the Closing actually occurs the “Closing Date”).
4.Conditions to Closing.
(a)Conditions to the Debt Holder’s Obligations. The obligations of the Debt Holder to consummate the transactions contemplated hereby are subject to the fulfillment by the Company prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Debt Holder:
(i)The representations and warranties of the Company contained in Section 5 shall be true and correct on and as of the date of the Closing.
(ii)The Company shall have performed or fulfilled all agreements and obligations contained herein that are required to be performed or fulfilled by the Company prior to the Closing.
(iii)The Company shall have complied with, and the Debt Exchange shall be effective under, all federal and state securities laws applicable to the Debt Exchange. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state or foreign country that are required in connection with the Exchange shall be duly obtained and effective.
(iv)All corporate and other proceedings required to be taken by the Company in connection with the Exchange and the other transactions contemplated hereby and all documents incident thereto shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Company on or prior to the Closing shall have been obtained.
(b)Conditions to the Company’s Obligations. The obligations of the Company to consummate the transactions contemplated hereby are subject to the fulfillment by Debt Holder prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Company:
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(i)The representations and warranties of the Debt Holder contained in Section 6 shall be true and correct on and as of the date of the Closing.
(iii)The Debt Holder shall have performed or fulfilled all agreements, obligations and conditions contained herein and required to be performed or fulfilled by it before the Closing.
5.Representations and Warranties of the Company. As of the date of this Debt Exchange Agreement and as of the Closing, the Company hereby represents and warrants to the Debt Holder that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. The Company is a corporation duly organized, validly existing under, and by virtue of, the laws of the State of Nevada, and is in good standing under such laws. The Company has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted.
(b)Corporate Power. The Company has all requisite legal and corporate power and authority to execute and deliver this Debt Exchange Agreement and the other agreements contemplated hereby, to sell and issue the Exchange Shares, and to carry out and perform its obligations under the terms of this Debt Exchange Agreement and the Debt Exchange.
(c)Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the (i) authorization, execution, delivery and performance of this Debt Exchange Agreement, (ii) authorization, sale, issuance and delivery of the Exchange Shares, and (iii) performance of all of the Company’s obligations hereunder, have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Company and constitutes (or will constitute) the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)No Conflicts; Consents. The execution, delivery and performance by the Company of this Debt Exchange Agreement and the documents to be delivered hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the articles of incorporation or bylaws of the Company, as such have been amended to date; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any agreement or other instrument to which the Company is a party, including without limitation the Debt. No consent, approval, waiver or authorization is required to be obtained by the Company from any person in connection with the execution, delivery and performance by the Company of this Debt Exchange Agreement or the consummation of the transactions contemplated hereby or thereby.
(e)Valid Issuance of Stock. The Exchange Shares have been duly authorized and, when issued, sold and delivered in compliance with the provisions of this Debt Exchange Agreement, will be duly and validly issued, fully paid and nonassessable and issued in compliance with applicable federal and state securities laws. The Exchange Shares will be free and clear of any liens or encumbrances; provided, however, that the Exchange Shares shall be subject to restrictions on transfer under state and/or federal securities laws. None of the Exchange Shares will be subject to any preemptive rights or rights of first refusal.
(f)Exemption. It is the intention of the Company that the Debt Exchange be made pursuant to an exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(9) thereunder.
(g)Not Acting for Others. The Company acknowledges that the Debt Holder is acting in its individual capacity hereunder and not for any other holders of the Company’s outstanding convertible promissory notes, and that accordingly, this Debt Exchange Agreement shall in no way effect the rights of any other holders of the Company’s outstanding convertible promissory notes. The Company further acknowledges that the Debt Holder is making no representations, warranties or covenants on behalf of such other holders of the Company’s outstanding convertible promissory notes.
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(h)OTC Compliance. The Company is in compliance with applicable continued listing requirements of OTCID tier of the OTC Markets (the “OTCID”). There are no proceedings pending or, to the Company’s knowledge, threatened against the Company relating to the continued listing of the Common Stock on the OTCID and the Company has not received any notice of, nor to the Company’s knowledge is there any basis for, the delisting of the Common Stock from the OTCID.
6.Representations and Warranties of the Debt Holder. As of the date of this Debt Exchange Agreement and as of the Closing, Debt Holder hereby represents and warrants to the Company that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. If the Debt Holder is an entity, the Debt Holder is duly organized, validly existing and in good standing under, and by virtue of, the laws of its jurisdiction of formation.
(b)Corporate Power. If the Debt Holder is an entity, the Debt Holder has all power and authority to execute and deliver this Debt Exchange Agreement, purchase the Exchange Shares, effect the Debt Exchange, and carry out and perform its obligations under the terms of this Debt Exchange Agreement and the transactions contemplated hereby.
(c)Authorization. If the Debt Holder is an entity, all corporate action on the part of the Debt Holder necessary for the authorization, execution, delivery and performance of this Debt Exchange Agreement, the purchase of the Exchange Shares, the Debt Exchange, and the performance of all of the Debt Holder’s obligations hereunder have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Debt Holder and constitutes the valid and legally binding obligation of the Debt Holder, enforceable against the Debt Holder in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)For the Debt Holder’s Account. The Debt Holder represents and confirms that the Exchange Shares to be issued to the Debt Holder hereunder are being and will be acquired for the Debt Holder’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof.
(e)Accredited Investor and Investment Experience. The Debt Holder is an “Accredited Investor,” as such term is defined in Regulation D promulgated under the Securities Act. The Debt Holder represents that is and its representatives are experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development as the Company and that the Debt Holder can bear the economic risk of an investment in the Exchange Shares and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Exchange Shares.
7.Reserved.
8.Covenants.
(a)Removal of Legend. The Company covenants to cause its transfer agent to remove any restrictive legends on the Conversion Shares within two (2) business days of the date when such Conversion Shares are freely transferrable by the Debt Holder under Rule 144 of the Securities Act.
(b)Indemnification. Each party shall defend, indemnity and hold harmless the other party and its officers, directors, employees, owners, insurers and agents against all obligations, demands, claims and liabilities claimed or asserted by any other party (collectively, “Claims”) in connection with the transactions contemplated by this Debt Exchange Agreement. The Company agrees to promptly reimburse the Debt Holder for its reasonable costs and expenses, including attorneys’ fees and legal expenses, incurred in connection with the enforcement of this Debt Exchange Agreement.
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(c)Continuous Listing of Common Shares. The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on the OTCID, or on a national securities exchange, and, in accordance therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the OTCID, or such national securities exchange, as applicable.
9.Termination. This Debt Exchange Agreement may be terminated at any time prior to the Closing:
(a)by the mutual written consent of the Company and the Debt Holder;
(b)by the Debt Holder by written notice to the Company if the Debt Holder is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Company pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(a) and such breach, inaccuracy or failure has not been cured by the Company within two (2) days of the Company’s receipt of written notice of such breach from the Debt Holder;
(c)by the Company by written notice to the Debt Holder if the Company is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Debt Holder pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(b) and such breach, inaccuracy or failure has not been cured by the Debt Holder within two (2) days of the Debt Holder’s receipt of written notice of such breach from the Company; or
(d)by the Company or the Debt Holder in the event that (i) there shall be any law that makes consummation of the transactions contemplated by this Debt Exchange Agreement illegal or otherwise prohibited, or (ii) any governmental authority shall have issued a governmental order restraining or enjoining the transactions contemplated by this Debt Exchange Agreement, and such governmental order shall have become final and non-appealable.
10.Effect of Termination. In the event of the termination of this Debt Exchange Agreement in accordance with Section 9, this Debt Exchange Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a)as set forth in this Section 10 and Section 9(d) hereof; and
(b)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.
For the sake of clarity, (i) until the Closing, the Debt, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms, and (ii) in the event that this Debt Exchange Agreement is terminated, the Debt, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms.
11.Miscellaneous.
(a)Survival of Representations, Warranties and Covenants. The warranties, representations and covenants of the Company and of the Debt Holder contained in or made pursuant to this Debt Exchange Agreement shall survive the execution and delivery of this Debt Exchange Agreement and the Closing.
(b)Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Debt Exchange Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Debt Exchange Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Debt Exchange Agreement, except as expressly provided in this Debt Exchange Agreement.
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(c)Governing Law. This Debt Exchange Agreement is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada.
(d)Counterparts. This Debt Exchange Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures received by pdf shall be deemed to be original signatures.
(e)Titles and Subtitles. The titles and subtitles used in this Debt Exchange Agreement are used for convenience only and are not to be considered in construing or interpreting this Debt Exchange Agreement.
(f)Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Debt Exchange Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile or email, on the date of transmission with receipt of a transmittal confirmation, or (c) if by international courier service, on the second (2nd) business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service. A party may change or supplement the addresses provided in this Debt Exchange Agreement, or designate additional addresses, for purposes of this Section 11(f) by giving the other party written notice of the new address in the manner set forth above.
(g)Amendments and Waivers. Any term of this Debt Exchange Agreement may be amended and the observance of any term of this Debt Exchange Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Debt Holder.
(h)Severability. If one or more provisions of this Debt Exchange Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Debt Exchange Agreement and the balance of this Debt Exchange Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
(i)Entire Agreement. This Debt Exchange Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, being the duly authorized representative of the Company, has executed this Debt Exchange Agreement as of the date set forth above.
| COMPANY: | |
| IIOT-OXYS, INC. | |
| By: /s/ Karen McNemar________________________ | |
| Name: Karen McNemar | |
| Title: Interim CFO |
The undersigned, desiring to enter into the Debt Exchange Agreement, as of the date set forth above, hereby agrees to convert the entire Conversion Amount set forth below into the number of Exchange Shares set forth below. The undersigned specifically acknowledges having read the representations section in the Debt Exchange Agreement entitled “Representations and Warranties of the Debt Holder” and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned.
| DEBT HOLDER | |
| /s/ Clifford L. Emmons | |
| Signature | |
| Clifford L. Emmons | |
| Print Name | |
| $387,242 | |
| Principal Amount of Debt | |
| 268.529 | |
| Number of Exchange Shares |
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Exhibit 10.25
Consulting Agreement
This Consulting Agreement (the “Agreement”), dated this 30th day of October 2025 (the “Effective Date”) is by and between Clifford L. Emmons (hereinafter referred to as the “Consultant”), and IIOT-OXYS, Inc., a Nevada corporation (hereinafter referred to as the “Company”).
Recitals:
A. The Company desires to engage the Consultant to provide consulting services for the Company.
B. The Company desires the Consultant to continue to serve as its Chief Executive Officer during the Term (as defined below).
C. The Consultant has significant experience and has agreed to provide the services on the terms and conditions set forth in this Agreement.
Now, therefore, in consideration of the faithful performance of the obligations set forth herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Consultant and the Company hereby agree as follows.
1. Engagement. The Company hereby engages the Consultant, and the Consultant hereby accepts the engagement, to provide certain consulting services for the Company subject to and in compliance with the terms and conditions of this Agreement. By entering into this Agreement, the parties agree that all previous agreements between the parties shall be terminated as of the Effective Date.
2. Continued Service as CEO. The Consultant shall continue to serve as Chief Executive Officer of the Company through the Term. Upon the earlier of the expiration of the Term or the termination of the Agreement pursuant to the terms herein, the Consultant agrees to tender his written resignation as Chief Executive Officer of the Company.
3. Term of Service. The Company hereby retains the Consultant for a period of three (3) months beginning as of the Effective Date, which term shall be automatically renewable upon mutual consent of the parties for additional one-month terms as provided herein, unless sooner terminated as provided in Section 7 below (the “Term”). The Term and any extension thereof shall be referred to herein as the “Consulting Period.” Any Services provided hereunder, and any compensation paid prior to the date this Agreement is executed by the parties, but after the Effective Date, shall be included in this Agreement.
4. Services to Be Provided. During the Consulting Period the Consultant shall provide the following services to the Company:
a. Consulting Services. The Consultant will provide those services customarily provided by a Chief Executive Officer in connection with operations similar to the Company’s business operations, including, but not limited to, the following (the “Services”):
(i) Assist with the preparation and filing of the filings of the Company with the Securities and Exchange Commission;
(ii) Oversee the maintenance of/access to the Company’s assets and a potential sale of those assets to a third-party;
(iii) Business development; and
(iv) Such other services related to the Company’s operations as the parties shall reasonable determine as required or beneficial for the Company.
b. Availability. The Consultant shall perform the Services on an as-needed basis as reasonably requested by the Company from time to time and the Consultant shall make himself reasonably available to perform such Services in a timely manner. The parties shall in good faith develop a schedule of projects to be performed in connection with the Company’s operations with the completion dates for each project.
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c. Manner of Services Provided. The Consultant agrees that the Services will be rendered in a “workmanlike manner,” consistent with the manner of performance by other consultants providing the same or similar services as being rendered hereunder.
5. Devotion of Time. During the Consulting Period, the Consultant shall expend adequate working time to perform the Services set forth herein; shall devote his best efforts, energy and skill to the services of the Company and the development of the Company’s business operations; and shall not take part in activities detrimental to the best interests of the Company. Nothing in this Agreement shall preclude the Consultant during the term of this Agreement from engaging, directly or indirectly, in any business activity which is not competitive with the then existing business of the Company.
6. Disclosure of Material Events. The Company shall promptly disclose to the Consultant those events or discoveries which are known and/or reasonably anticipated that, in the judgment of the Company may have a material impact on the Company’s business operations and which may have a material impact on the ability and effectiveness of the Consultant in providing the Services hereunder.
7. Compensation. In consideration for Services provided by the Consultant to the Company, the Company shall provide the following compensation to the Consultant:
a. Monthly Fees. The Consultant shall receive a monthly fee of $4,166.66 of Series E Convertible Preferred Stock (the “Shares”) of the Company issuable no later than fifteen (15) days following the end of the month.
b. Reimbursable Expenses. The Company agrees to reimburse the Consultant for all direct expenses authorized by the Company in writing incurred during the Term of this Agreement. The Consultant shall submit invoices for such expenses and shall provide such supporting information and documentation as the Company may reasonably request in accordance with Company policy and the requirements of the Internal Revenue Code. The Company shall pay such invoices within fifteen (15) days of receipt.
8. Termination and Extension. The Term shall be sooner terminated or further extended under the following circumstances:
a. Termination for Cause. Either party hereto shall be entitled, with thirty (30) days’ prior notice, to terminate this Agreement with or without cause.
b. Extension of Term. The initial Term may be further extended with the express authorization of the Company’s Board of Directors and the Consultant. Any extended term may be terminated at any time at the will of the Board of Directors, with or without cause.
9. Confidential Information. The Consultant recognizes and acknowledges that certain information, including, but not limited to, information pertaining to the financial condition of the Company, its systems, methods of doing business, agreements with customers or suppliers, or other aspects of the business of the Company or which are sufficiently secret to derive economic value from not being disclosed (hereinafter “Confidential Information”) may be made available or otherwise come into the possession of the Consultant by reason of this engagement with the Company. Accordingly, the Consultant agrees that no agent, employee, or representative will (either during or after the term of this Agreement) disclose any Confidential Information to any person, firm, corporation, association, or other entity for any reason or purpose whatsoever or make use to its or their personal advantage or to the advantage of any third party, of any Confidential Information, without the prior written consent of the Company. The parties hereto agree that the provisions of this Section shall not apply with respect to any information that the Consultant can document (i) is or becomes (through no improper action or inaction by the Consultant or any affiliate, agent, consultant or employee) generally available to the public, or (ii) was in its possession or known by it without any limitation on use or disclosure prior to the Effective Date. The Consultant shall, upon termination of this engagement, return to the Company, and shall cause his agents, employees, and representatives to return to the Company, all documents which reflect Confidential Information (including copies thereof). Notwithstanding anything heretofore stated in this paragraph, the Consultant’s obligations under this Agreement shall not, after termination of Consultant’s engagement with the Company, apply to information which has become generally available to the public without any action or omission of the Consultant (except that any Confidential Information which is disclosed to any third party by an employee or representative of the Company who is authorized to make such disclosure shall be deemed to remain confidential and protectable under this provision).
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10. Trading Practices. So long as the Consultant is in possession of any material non-public information of the Company, the Consultant shall not, directly or indirectly engage in the purchase or sale the common stock of the Company. During the Term of this Agreement, and for a period of one year after the termination of this Agreement, the Consultant shall not, directly or indirectly, engage in any short selling activities of the common stock of the Company.
11. Independent Contractor. The Consultant agrees that in performing this Agreement, it is acting as an independent contractor and not as an employee, representative, or agent of the Company and shall provide all facilities and equipment necessary to fulfill its obligations hereunder. As an independent contractor, the Consultant shall make no representation as an agent or employee of the Company, shall have no authority to bind the Company or incur other obligations on behalf of the Company, and shall not be eligible for any benefits which the Company may provide to its employees. Likewise, the Company shall have no authority to bind or incur obligations on behalf of the Consultant. All persons hired or retained by Consultant to perform this Agreement, including, but not limited to, its employees, representatives, and agents, shall be employees or contractors of the Consultant and shall not be construed as employees or agents of the Company in any respect. The Consultant shall be responsible for all taxes, insurance and other costs and payments legally required to be withheld or provided in connection with Consultant’s performance of this Agreement, including without limitation, all withholding taxes, worker’s compensation insurance, and similar costs. The Consultant shall abide by all laws, rules, and regulations pertaining to the Services to be provided hereunder.
12. Securities Law Representations and Warranties. The Consultant has been advised that the issuance of the Shares is not registered under the Securities Act of 1933, as amended (the “Act”), or applicable state securities laws, but are being sold pursuant to exemptions from such laws, and that the Company’s reliance upon such exemptions is predicated in part on the Consultant’s representations contained herein. The Consultant acknowledges that the Company is relying, in part, upon the Consultant’s representations and warranties contained herein for the purpose of qualifying the issuance of the Shares for applicable exemptions from registration or qualification pursuant to federal or state securities laws, rules and regulations.
12.1 Acquired Entirely for Own Account. The Shares will be acquired for the Consultant’s own account, not as a nominee or agent, and not with a view to distributing all or any part thereof. The Consultant has no present intention of selling, granting any participation in or otherwise distributing any of the Shares in a manner contrary to the Act or any applicable state securities law. The Consultant does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participation to such person or to any third person with respect to any of the Shares.
12.2 Due Diligence. The Consultant has been solely responsible for its own due diligence investigation of the Company and its business, and its analysis of the merits and risks of the investment made pursuant to this Agreement, and are not relying on anyone else’s analysis or investigation of the Company, its business or the merits and risks of the Shares other than professional advisors employed specifically by the Consultant to assist the Consultant.
12.3 Access to Information. The Consultant believes it has been given access to full and complete information regarding the Company, including, in particular, the current financial condition and lack of tangible assets of the the Company and the risks associated therewith, and has utilized such access to its satisfaction for the purpose of obtaining information about the Company; particularly, the Consultant has either attended or been given reasonable opportunity to attend a meeting with management of the Company, for the purpose of asking questions of, and receiving answers from, such persons concerning the terms and conditions of the issuance of the Shares and to obtain any additional information, to the extent reasonably available, necessary to verify the accuracy of information provided to the Consultant about the Company.
12.4 Sophistication. The Consultant, either alone or with the assistance of its professional advisors, is a sophisticated investor, is able to fend for itself in the transactions contemplated by this Agreement, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the prospective investment in the Shares.
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12.5 Suitability. The investment in the Shares is suitable for the Consultant based upon its investment objectives and financial needs, and the Consultant has adequate net worth and means for providing for their current financial needs and contingencies and has no need for liquidity of investment with respect to the Shares. The Consultant’s overall commitment to investments that are illiquid or not readily marketable is not disproportionate to its net worth, and investment in the Shares will not cause such overall commitment to become excessive.
12.6 Professional Advice. The Consultant has obtained, to the extent it deems necessary, its own professional advice with respect to the risks inherent in the investment in the Shares, the condition of the Company and the suitability of the investment in the Shares in light of the Consultant’s financial condition and investment needs.
12.7 Ability to Bear Risk. The Consultant is in a financial position to purchase and hold the Shares and is able to bear the economic risk and withstand a complete loss of its investment in the Shares.
12.8 Accredited Investor. The Consultant is an “accredited investor” within the meaning of Rule 501(a)(3) of Regulation D promulgated under the Act.
12.9 Restricted Securities. The Consultant realizes that (a) the Shares have not been registered under the Act, are characterized under the Act as “restricted securities” and, therefore, cannot be sold or transferred unless subsequently registered under the Act or an exemption from such registration is available, and (b) there is presently a limited public market for the Shares and the Consultant would most likely not be able to liquidate its investment in the event of an emergency or to pledge the Shares as collateral security for loans. The Consultant’s financial condition is such that it is unlikely that the Consultant would need to dispose of any of the Shares in the foreseeable future. In this connection, the Consultant represents that it is familiar with Rule 144 of the SEC, as presently in effect, and understands the resale limitations imposed thereby and by the Act.
13. Miscellaneous Provisions.
a.Notice. All notices required or permitted hereunder shall be in writing and shall be deemed effective: (i) upon personal delivery; (ii) in the case of delivery by mail within the continental United States, on the fourth (4th) business day after such notice or other communication shall have been deposited in the mail, postage prepaid, return receipt requested; (iii) when sent by either facsimile or email at the applicable facsimile number or email address set forth below upon confirmation of transmission or receipt of mailing; or (iv) in the case of delivery by internationally recognized overnight delivery service, when received, addressed as follows:
If to the Company to:
IIOT-OXYS, Inc.
705 Cambridge Street
Cambridge, MA 02141
Attn: Board of Directors
If to the Consultant, to:
Clifford L. Emmons
24 Freedom Trail
Dennis, MA 02638
or to such other address or addresses as either party shall designate to the other in writing from time to time by like notice.
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b.Attorneys’ Fees. If any legal action or other proceeding is brought for the enforcement of this Agreement, or because of an alleged dispute, breach, default, or misrepresentation in connection with any of the provisions of this Agreement, the successful or prevailing party or parties will be entitled to recover reasonable attorneys’ fees and other costs incurred in that action or proceeding, in addition to any other relief to which it or he may be entitled.
c.Additional Remedies. The Consultant acknowledges and agrees that, in the event it shall violate any of the restrictions of this Agreement, the Company will be without adequate remedy at law and will therefor be entitled to enforce such restrictions by temporary or permanent injunctive or mandatory relief obtained in an action or may have at law or in equity, and the Consultant hereby consents to the jurisdiction of such court for such purpose, provided that reasonable notice of any proceeding is given, it being understood that such injunction shall be in addition to any remedy which the Company may have at law or otherwise.
d.Entire Agreement; Modification; Waiver. This Agreement constitutes the entire agreement between or among the parties pertaining to the subject matter contained in it and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties. No supplement, modification, or amendment of this Agreement will be binding unless executed in writing by all the parties or the applicable parties to be bound by such amendment. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision, whether or not similar, nor will any waiver constitute a continuing waiver. No waiver will be binding unless executed in writing by the party making the waiver.
e.Survival of Covenants, Etc. All covenants, representations and warranties made herein shall survive the making of this Agreement and shall continue in full force and effect for a period of two (2) years from the termination date of this Agreement, at the end of which period no claim may be made with respect to any such covenant, representation, or warranty unless such claim shall have been asserted in writing to the indemnifying party during such period.
f.Assignment. This Agreement, as it relates to the engagement of the Consultant, is a personal contract and the rights and interests of the Consultant hereunder may not be sold, transferred, assigned, pledged or hypothecated, without the prior written consent of the Company, which consent may be withheld for any reason.
g.Binding on Successors. This Agreement will be binding on, and will inure to the benefit of, the parties to it and their respective successors, and assigns.
h.Governing Law and Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Massachusetts applicable to contracts made and to be performed in such State, without reference to the choice of law principals thereof, and any and all actions to enforce the provisions of this Agreement shall be brought in a court of competent jurisdiction in the State of Massachusetts and in no other place.
i.Rights Are Cumulative. The rights and remedies granted to the parties hereunder shall be in addition to and cumulative of any other rights or remedies either may have under any document or documents executed in connection herewith or available under applicable law. No delay or failure on the part of a party in the exercise of any power or right shall operate as a waiver thereof nor as an acquiescence in any default nor shall any single or partial exercise of any power or right preclude any other or further exercise thereof or the exercise of any other power or right.
j.Severability. If any provision of this Agreement is held invalid or unenforceable by any court of final jurisdiction, it is the intent of the parties that all other provisions of this Agreement be construed to remain fully valid, enforceable, and binding on the parties.
k.Drafting. This Agreement was drafted with the joint participation of the parties and/or their legal counsel. Any ambiguity contained in this Agreement shall not be construed against any party as the draftsman, but this Agreement shall be construed in accordance with its fair meaning.
l.Headings. The descriptive headings of the various paragraphs or parts of this Agreement are for convenience only and shall not affect the meaning or construction of any of the provisions hereof.
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m.Number and Gender. Wherever from the context it appears appropriate, each term stated in either the singular or the plural shall include the singular and the plural, and pronouns stated in either the masculine, the feminine, or the neuter gender shall include the masculine, feminine, and neuter.
n.Counterparts; Facsimile Execution. This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one instrument. Delivery of an executed counterpart of this Agreement by facsimile or email shall be equally as effective as delivery of a manually executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by facsimile or email also shall deliver a manually executed counterpart of this Agreement, but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, or binding effect of this Agreement.
o.Full Knowledge. By their signatures, the parties acknowledge that they have carefully read and fully understand the terms and conditions of this Agreement, that each party has had the benefit of counsel, or has been advised to obtain counsel, and that each party has freely agreed to be bound by the terms and conditions of this Agreement.
[Signature Page Follows]
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Signature Page
In Witness Whereof, each of the parties hereto, thereunto duly authorized, has executed this Agreement the respective day and year set forth below.
| Company: | IIOT-OXYS, Inc. | |
| Date: October 30, 2025 | By: | /s/ Karen McNemar |
| Karen McNemar, Interim CFO | ||
| Consultant: | ||
| Date: October 30, 2025 | By: | /s/ Clifford L. Emmons |
| Clifford L. Emmons | ||
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Exhibit 10.29
DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT (this “Debt Exchange Agreement”), dated as of October 30, 2025, is entered into by and between IIOT-OXYS, Inc., a Nevada corporation with its principal offices at 705 Cambridge St., Cambridge, MA 01241 (the “Company”), and the debt holder set forth on the signature page hereto (the “Debt Holder”).
WHEREAS, as of the date set forth on the signature page hereto, the Debt Holder owed certain debt by the Company (the “Debt”) in the principal amount set forth on the signature page hereto;
WHEREAS, as of the date set forth on the signature page hereto, the Debt Holder owns 6,045 shares of Series A Supervoting Preferred Stock of the Company (the “Series A Preferred Stock”);
WHEREAS, the Company and the Debt Holder desire to convert the entire Debt into the number of shares of Series E Preferred Stock of the Company set forth on the signature page hereto (the “Exchange Shares”), at the Stated Value per Exchange Share (as stated in the Certificate of Designation for the Series E Preferred Stock) and to terminate the Series A Preferred Stock.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.The Debt Exchange.
(a)Issuance of Exchange Shares; Cancellation of Indebtedness and Series A Preferred Stock. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Company shall issue the Exchange Shares to the Debt Holder in exchange for the cancellation of all indebtedness of the Company owed to the Debt Holder as evidenced by the Debt and all of the Series A Preferred Stock, and for no additional consideration (the “Debt Exchange”).
(b)General Release. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Debt Holder hereby releases, waives, discharges and relinquishes any and all rights, claims, demands, contentions and causes of action of every kind, nature, character and description whatsoever, whether known or unknown, suspected or unsuspected, apparent or concealed, fixed or contingent, arising from the Debt and Series A Preferred Stock (collectively, the “Debt Documents”) on or before the Closing Date, which it now has or hereafter may be entitled to claim against the Company, its directors, officers, managers, members, agents, attorneys, and employees (the “Released Parties”), including but without limiting the generality of foregoing, all claims arising from or in connection with or otherwise resulting from any matter, event, state of facts, claim, contention or cause whatsoever, occurring or existing in connection with or relating to the Debt Documents on or before the Closing Date (collectively, the “Claims”). The Debt Holder agrees that the waiver and release described in this Section 1(b) applies to all Claims, whether or not the Debt Holder currently knows about them or suspects that they exist. Notwithstanding anything to the contrary expressed or implied herein, however, none of the foregoing released Claims shall include any claims against a Released Party arising by reason of such Released Party’s breach of this Debt Exchange Agreement. In addition, none of the foregoing releases extend to any breach of the Debt Exchange Agreement, and no remedies for any such breach are being released herein.
(c)Fractional Exchange Shares. The Exchange Shares shall be issued in full satisfaction and payment of all indebtedness of the Company owed to the Debt Holder as evidenced by the Debt. In the event that, as a result of the Debt Exchange, fractional Exchange Shares would be required to be issued, such fractional Exchange Shares shall be rounded up or down to the nearest whole share.
(d)Section 3(a)(9) Exchange Offer. It is the intent of the Company that the Debt Exchange be effectuated pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(9) thereunder, and that, therefore, the holding period of the Debt will, for securities law purposes, be tacked to the holding period of the Exchange Shares. In this regard, the Company covenants to use its best efforts to cause its transfer agent to issue certificates representing shares of Common Stock issued upon the conversion of the Exchange Shares (the “Conversion Shares”) without any restricted legend, and, if required by the transfer agent, to obtain an opinion of counsel addressed to the transfer agent to that effect.
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2.Closing Deliveries.
(a)At the Closing, the Company shall deliver to the Debt Holder:
(i)book entry shares in the name of the Debt Holder, or the Debt Holder’s designees, representing the Exchange Shares, free and clear of all liens and encumbrances, together with evidence of the calculation of the number of Exchange Shares contemplated by Section 7; and
(ii)such other documents, certificates or other information as the Debt Holder or its counsel may reasonably request.
(b)At the Closing, the Debt Holder shall deliver to the Company:
(i)the original Debt, for cancellation; and
(ii) such other documents, certificates or other information as the Company or its counsel may reasonably request.
3.The Closing. The closing of the Debt Exchange shall occur as the parties hereto agree upon the satisfaction of the conditions to closing set forth in Section 4 below (other than conditions to be satisfied at Closing) (the “Closing” and, the date on which the Closing actually occurs the “Closing Date”).
4.Conditions to Closing.
(a)Conditions to the Debt Holder’s Obligations. The obligations of the Debt Holder to consummate the transactions contemplated hereby are subject to the fulfillment by the Company prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Debt Holder:
(i)The representations and warranties of the Company contained in Section 5 shall be true and correct on and as of the date of the Closing.
(ii)The Company shall have performed or fulfilled all agreements and obligations contained herein that are required to be performed or fulfilled by the Company prior to the Closing.
(iii)The Company shall have complied with, and the Debt Exchange shall be effective under, all federal and state securities laws applicable to the Debt Exchange. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state or foreign country that are required in connection with the Exchange shall be duly obtained and effective.
(iv)All corporate and other proceedings required to be taken by the Company in connection with the Exchange and the other transactions contemplated hereby and all documents incident thereto shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Company on or prior to the Closing shall have been obtained.
(b)Conditions to the Company’s Obligations. The obligations of the Company to consummate the transactions contemplated hereby are subject to the fulfillment by Debt Holder prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Company:
(i)The representations and warranties of the Debt Holder contained in Section 6 shall be true and correct on and as of the date of the Closing.
(iii)The Debt Holder shall have performed or fulfilled all agreements, obligations and conditions contained herein and required to be performed or fulfilled by it before the Closing.
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5.Representations and Warranties of the Company. As of the date of this Debt Exchange Agreement and as of the Closing, the Company hereby represents and warrants to the Debt Holder that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. The Company is a corporation duly organized, validly existing under, and by virtue of, the laws of the State of Nevada, and is in good standing under such laws. The Company has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted.
(b)Corporate Power. The Company has all requisite legal and corporate power and authority to execute and deliver this Debt Exchange Agreement and the other agreements contemplated hereby, to sell and issue the Exchange Shares, and to carry out and perform its obligations under the terms of this Debt Exchange Agreement and the Debt Exchange.
(c)Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the (i) authorization, execution, delivery and performance of this Debt Exchange Agreement, (ii) authorization, sale, issuance and delivery of the Exchange Shares, and (iii) performance of all of the Company’s obligations hereunder, have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Company and constitutes (or will constitute) the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)No Conflicts; Consents. The execution, delivery and performance by the Company of this Debt Exchange Agreement and the documents to be delivered hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the articles of incorporation or bylaws of the Company, as such have been amended to date; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any agreement or other instrument to which the Company is a party, including without limitation the Debt. No consent, approval, waiver or authorization is required to be obtained by the Company from any person in connection with the execution, delivery and performance by the Company of this Debt Exchange Agreement or the consummation of the transactions contemplated hereby or thereby.
(e)Valid Issuance of Stock. The Exchange Shares have been duly authorized and, when issued, sold and delivered in compliance with the provisions of this Debt Exchange Agreement, will be duly and validly issued, fully paid and nonassessable and issued in compliance with applicable federal and state securities laws. The Exchange Shares will be free and clear of any liens or encumbrances; provided, however, that the Exchange Shares shall be subject to restrictions on transfer under state and/or federal securities laws. None of the Exchange Shares will be subject to any preemptive rights or rights of first refusal.
(f)Exemption. It is the intention of the Company that the Debt Exchange be made pursuant to an exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(9) thereunder.
(g)Not Acting for Others. The Company acknowledges that the Debt Holder is acting in its individual capacity hereunder and not for any other holders of the Company’s outstanding convertible promissory notes, and that accordingly, this Debt Exchange Agreement shall in no way effect the rights of any other holders of the Company’s outstanding convertible promissory notes. The Company further acknowledges that the Debt Holder is making no representations, warranties or covenants on behalf of such other holders of the Company’s outstanding convertible promissory notes.
(h)OTC Compliance. The Company is in compliance with applicable continued listing requirements of OTCID tier of the OTC Markets (the “OTCID”). There are no proceedings pending or, to the Company’s knowledge, threatened against the Company relating to the continued listing of the Common Stock on the OTCID and the Company has not received any notice of, nor to the Company’s knowledge is there any basis for, the delisting of the Common Stock from the OTCID.
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6.Representations and Warranties of the Debt Holder. As of the date of this Debt Exchange Agreement and as of the Closing, Debt Holder hereby represents and warrants to the Company that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. If the Debt Holder is an entity, the Debt Holder is duly organized, validly existing and in good standing under, and by virtue of, the laws of its jurisdiction of formation.
(b)Corporate Power. If the Debt Holder is an entity, the Debt Holder has all power and authority to execute and deliver this Debt Exchange Agreement, purchase the Exchange Shares, effect the Debt Exchange, and carry out and perform its obligations under the terms of this Debt Exchange Agreement and the transactions contemplated hereby.
(c)Authorization. If the Debt Holder is an entity, all corporate action on the part of the Debt Holder necessary for the authorization, execution, delivery and performance of this Debt Exchange Agreement, the purchase of the Exchange Shares, the Debt Exchange, and the performance of all of the Debt Holder’s obligations hereunder have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Debt Holder and constitutes the valid and legally binding obligation of the Debt Holder, enforceable against the Debt Holder in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)For the Debt Holder’s Account. The Debt Holder represents and confirms that the Exchange Shares to be issued to the Debt Holder hereunder are being and will be acquired for the Debt Holder’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof.
(e)Accredited Investor and Investment Experience. The Debt Holder is an “Accredited Investor,” as such term is defined in Regulation D promulgated under the Securities Act. The Debt Holder represents that is and its representatives are experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development as the Company and that the Debt Holder can bear the economic risk of an investment in the Exchange Shares and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Exchange Shares.
7.Calculation of Exchange Shares. The number of Exchange Shares to be issued in the debt Exchange shall equal the Conversion Amount divided by $1,200.00 per share.
8.Covenants.
(a)Removal of Legend. The Company covenants to cause its transfer agent to remove any restrictive legends on the Conversion Shares within two (2) business days of the date when such Conversion Shares are freely transferrable by the Debt Holder under Rule 144 of the Securities Act.
(b)Indemnification. Each party shall defend, indemnity and hold harmless the other party and its officers, directors, employees, owners, insurers and agents against all obligations, demands, claims and liabilities claimed or asserted by any other party (collectively, “Claims”) in connection with the transactions contemplated by this Debt Exchange Agreement. The Company agrees to promptly reimburse the Debt Holder for its reasonable costs and expenses, including attorneys’ fees and legal expenses, incurred in connection with the enforcement of this Debt Exchange Agreement.
(c)Continuous Listing of Common Shares. The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on the OTCID, or on a national securities exchange, and, in accordance therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the OTCID, or such national securities exchange, as applicable.
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9.Termination. This Debt Exchange Agreement may be terminated at any time prior to the Closing:
(a)by the mutual written consent of the Company and the Debt Holder;
(b)by the Debt Holder by written notice to the Company if the Debt Holder is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Company pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(a) and such breach, inaccuracy or failure has not been cured by the Company within two (2) days of the Company’s receipt of written notice of such breach from the Debt Holder;
(c)by the Company by written notice to the Debt Holder if the Company is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Debt Holder pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(b) and such breach, inaccuracy or failure has not been cured by the Debt Holder within two (2) days of the Debt Holder’s receipt of written notice of such breach from the Company; or
(d)by the Company or the Debt Holder in the event that (i) there shall be any law that makes consummation of the transactions contemplated by this Debt Exchange Agreement illegal or otherwise prohibited, or (ii) any governmental authority shall have issued a governmental order restraining or enjoining the transactions contemplated by this Debt Exchange Agreement, and such governmental order shall have become final and non-appealable.
10.Effect of Termination. In the event of the termination of this Debt Exchange Agreement in accordance with Section 9, this Debt Exchange Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a)as set forth in this Section 10 and Section 9(d) hereof; and
(b)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.
For the sake of clarity, (i) until the Closing, the Debt, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms, and (ii) in the event that this Debt Exchange Agreement is terminated, the Debt, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms.
11.Miscellaneous.
(a)Survival of Representations, Warranties and Covenants. The warranties, representations and covenants of the Company and of the Debt Holder contained in or made pursuant to this Debt Exchange Agreement shall survive the execution and delivery of this Debt Exchange Agreement and the Closing.
(b)Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Debt Exchange Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Debt Exchange Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Debt Exchange Agreement, except as expressly provided in this Debt Exchange Agreement.
(c)Governing Law. This Debt Exchange Agreement is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada.
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(d)Counterparts. This Debt Exchange Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures received by pdf shall be deemed to be original signatures.
(e)Titles and Subtitles. The titles and subtitles used in this Debt Exchange Agreement are used for convenience only and are not to be considered in construing or interpreting this Debt Exchange Agreement.
(f)Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Debt Exchange Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile or email, on the date of transmission with receipt of a transmittal confirmation, or (c) if by international courier service, on the second (2nd) business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service. A party may change or supplement the addresses provided in this Debt Exchange Agreement, or designate additional addresses, for purposes of this Section 11(f) by giving the other party written notice of the new address in the manner set forth above.
(g)Amendments and Waivers. Any term of this Debt Exchange Agreement may be amended and the observance of any term of this Debt Exchange Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Debt Holder.
(h)Severability. If one or more provisions of this Debt Exchange Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Debt Exchange Agreement and the balance of this Debt Exchange Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
(i)Entire Agreement. This Debt Exchange Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, being the duly authorized representative of the Company, has executed this Debt Exchange Agreement as of the date set forth above.
| COMPANY: | |
| IIOT-OXYS, INC. | |
| By: /s/ Clifford L. Emmons_____________________ | |
| Name: Clifford L. Emmons | |
| Title: CEO |
The undersigned, desiring to enter into the Debt Exchange Agreement, as of the date set forth above, hereby agrees to convert the entire Conversion Amount set forth below into the number of Exchange Shares set forth below. The undersigned specifically acknowledges having read the representations section in the Debt Exchange Agreement entitled “Representations and Warranties of the Debt Holder” and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned.
| DEBT HOLDER | |
| /s/ Karen McNemar | |
| Signature | |
| Karen McNemar | |
| Print Name | |
| $323,269 | |
| Principal Amount of Debt | |
| 269 | |
| Number of Exchange Shares (@ $1,200.00 per share) |
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Exhibit 10.31
DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT (this “Debt Exchange Agreement”), dated as of October 30, 2025, is entered into by and between IIOT-OXYS, Inc., a Nevada corporation with its principal offices at 705 Cambridge St., Cambridge, MA 01241 (the “Company”), and the noteholder set forth on the signature page hereto (the “Noteholder”).
WHEREAS, as of the date set forth on the signature page hereto, the Noteholder purchased a senior secured convertible promissory note of the Company (the “Convertible Note”) in the principal amount set forth on the signature page hereto, with an interest rate set forth on the signature page hereto, pursuant to the terms of that certain Securities Purchase Agreement (the “Securities Purchase Agreement”), by and among the Company and the Noteholder and the Noteholder owns 12,000 shares of the Company’s Series A Supervoting Preferred Stock (the “Series A Preferred Stock”);
WHEREAS, in order to induce the Noteholder to purchase the Convertible Note, as provided for in the Securities Purchase Agreement, the Company agreed to grant a security interest to the Noteholder in and to certain collateral of the Company (the “Collateral”) in order to secure the prompt and complete payment, observance and performance of under the Convertible Note, pursuant to the terms of that certain Security Agreement (the “Security Agreement”), by and among the Company and the Noteholder;
WHEREAS, the Convertible Note’s maturity date (as it may have been amended to date, the “Maturity Date”), is set forth on the signature page hereto;
WHEREAS, the Convertible Note’s conversion rate (as it may have been amended to date, the “Conversion Rate”), is set forth on the signature page hereto;
WHEREAS, the aggregate amount of principal and interest that will be due and payable under the Convertible Note as of the Maturity Date (the “Conversion Amount”) is set forth on the signature page hereto; and
WHEREAS, the Company and the Noteholder desire to convert the entire Conversion Amount into the number of shares of Series E Preferred Stock of the Company set forth on the signature page hereto (the “Exchange Shares”), at the Stated Value per Exchange Share (as stated in the Certificate of Designation for the Series E Preferred Stock) and to terminate the Series A Preferred Stock.
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.The Debt Exchange.
(a)Issuance of Exchange Shares; Cancellation of Indebtedness. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Company shall issue the Exchange Shares to the Noteholder in exchange for the cancellation of all indebtedness of the Company owed to the Noteholder as evidenced by the Convertible Note and all of the Series A Preferred Stock, and for no additional consideration (the “Debt Exchange”).
(b)General Release. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Noteholder hereby releases, waives, discharges and relinquishes any and all rights, claims, demands, contentions and causes of action of every kind, nature, character and description whatsoever, whether known or unknown, suspected or unsuspected, apparent or concealed, fixed or contingent, arising from the Convertible Note, the Securities Purchase Agreement, the Security Agreement, and the Series A Preferred Stock (collectively, the “Debt Documents”) on or before the Closing Date, which it now has or hereafter may be entitled to claim against the Company, its directors, officers, managers, members, agents, attorneys, and employees (the “Released Parties”), including but without limiting the generality of foregoing, all claims arising from or in connection with or otherwise resulting from any matter, event, state of facts, claim, contention or cause whatsoever, occurring or existing in connection with or relating to the Debt Documents on or before the Closing Date (collectively, the “Claims”). The Noteholder agrees that the waiver and release described in this Section 1(b) applies to all Claims, whether or not the Noteholder currently knows about them or suspects that they exist. Notwithstanding anything to the contrary expressed or implied herein, however, none of the foregoing released Claims shall include any claims against a Released Party arising by reason of such Released Party’s breach of this Debt Exchange Agreement. In addition, none of the foregoing releases extend to any breach of the Debt Exchange Agreement, and no remedies for any such breach are being released herein.
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(c)Release of Security Interest and Termination of Senior Secured Promissory Note. At the Closing the Noteholder as full and final payment of the Convertible Note, the Noteholder hereby (i) irrevocably and unconditionally releases and forever discharges, from and as of the date hereof, (A) its security interest (including any lien, claim or encumbrances related thereto) in the Company, (B) its security interest (including any lien, claim or encumbrances related thereto) in the Collateral, (C) the obligations of the Company under the Convertible Note, and (ii) agrees that each of the Convertible Note and the Security Agreement is hereby terminated and shall be of no further force and effect without the necessity of any further action on the part of the Company, the Noteholder or any other person.
(d)Fractional Exchange Shares. The Exchange Shares shall be issued in full satisfaction and payment of all indebtedness of the Company owed to the Noteholder as evidenced by the Convertible Note. In the event that, as a result of the Debt Exchange, fractional Exchange Shares would be required to be issued, such fractional Exchange Shares shall be rounded up or down to the nearest whole share.
(e)Section 3(a)(9) Exchange Offer. It is the intent of the Company that the Debt Exchange be effectuated pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(9) thereunder, and that, therefore, the holding period of the Convertible Note will, for securities law purposes, be tacked to the holding period of the Exchange Shares. In this regard, the Company covenants to use its best efforts to cause its transfer agent to issue certificates representing shares of Common Stock issued upon the conversion of the Exchange Shares (the “Conversion Shares”) without any restricted legend, and, if required by the transfer agent, to obtain an opinion of counsel addressed to the transfer agent to that effect.
2.Closing Deliveries.
(a)At the Closing, the Company shall deliver to the Noteholder:
(i)book entry shares in the name of the Noteholder, or the Noteholder’s designees, representing the Exchange Shares, free and clear of all liens and encumbrances, together with evidence of the calculation of the number of Exchange Shares contemplated by Section 7; and
(ii)such other documents, certificates or other information as the Noteholder or its counsel may reasonably request.
(b)At the Closing, the Noteholder shall deliver to the Company:
(i)the original Convertible Note, for cancellation. Without limiting the generality of the foregoing, at the Closing, the Noteholder acknowledges that the Exchange Shares include consideration for the payment of all future interest due on or before the Maturity Date under the Convertible Note; and
(ii) such other documents, certificates or other information as the Company or its counsel may reasonably request.
3.The Closing. The closing of the Debt Exchange shall occur as the parties hereto agree upon the satisfaction of the conditions to closing set forth in Section 4 below (other than conditions to be satisfied at Closing) (the “Closing” and, the date on which the Closing actually occurs the “Closing Date”).
4.Conditions to Closing.
(a)Conditions to the Noteholder’s Obligations. The obligations of the Noteholder to consummate the transactions contemplated hereby are subject to the fulfillment by the Company prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Noteholder:
(i)The representations and warranties of the Company contained in Section 5 shall be true and correct on and as of the date of the Closing.
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(ii)The Company shall have performed or fulfilled all agreements and obligations contained herein that are required to be performed or fulfilled by the Company prior to the Closing.
(iii)The Company shall have complied with, and the Debt Exchange shall be effective under, all federal and state securities laws applicable to the Debt Exchange. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state or foreign country that are required in connection with the Exchange shall be duly obtained and effective.
(iv)All corporate and other proceedings required to be taken by the Company in connection with the Exchange and the other transactions contemplated hereby and all documents incident thereto shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Company on or prior to the Closing shall have been obtained.
(b)Conditions to the Company’s Obligations. The obligations of the Company to consummate the transactions contemplated hereby are subject to the fulfillment by Noteholder prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Company:
(i)The representations and warranties of the Noteholder contained in Section 6 shall be true and correct on and as of the date of the Closing.
(iii)The Noteholder shall have performed or fulfilled all agreements, obligations and conditions contained herein and required to be performed or fulfilled by it before the Closing.
5.Representations and Warranties of the Company. As of the date of this Debt Exchange Agreement and as of the Closing, the Company hereby represents and warrants to the Noteholder that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. The Company is a corporation duly organized, validly existing under, and by virtue of, the laws of the State of Nevada, and is in good standing under such laws. The Company has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted.
(b)Corporate Power. The Company has all requisite legal and corporate power and authority to execute and deliver this Debt Exchange Agreement and the other agreements contemplated hereby, to sell and issue the Exchange Shares, and to carry out and perform its obligations under the terms of this Debt Exchange Agreement and the Debt Exchange.
(c)Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the (i) authorization, execution, delivery and performance of this Debt Exchange Agreement, (ii) authorization, sale, issuance and delivery of the Exchange Shares, and (iii) performance of all of the Company’s obligations hereunder, have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Company and constitutes (or will constitute) the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)No Conflicts; Consents. The execution, delivery and performance by the Company of this Debt Exchange Agreement and the documents to be delivered hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the articles of incorporation or bylaws of the Company, as such have been amended to date; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any agreement or other instrument to which the Company is a party, including without limitation the Convertible Note. No consent, approval, waiver or authorization is required to be obtained by the Company from any person in connection with the execution, delivery and performance by the Company of this Debt Exchange Agreement or the consummation of the transactions contemplated hereby or thereby.
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(e)Valid Issuance of Stock. The Exchange Shares have been duly authorized and, when issued, sold and delivered in compliance with the provisions of this Debt Exchange Agreement, will be duly and validly issued, fully paid and nonassessable and issued in compliance with applicable federal and state securities laws. The Exchange Shares will be free and clear of any liens or encumbrances; provided, however, that the Exchange Shares shall be subject to restrictions on transfer under state and/or federal securities laws. None of the Exchange Shares will be subject to any preemptive rights or rights of first refusal.
(f)Exemption. It is the intention of the Company that the Debt Exchange be made pursuant to an exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(9) thereunder.
(g)Not Acting for Others. The Company acknowledges that the Noteholder is acting in its individual capacity hereunder and not for any other holders of the Company’s outstanding convertible promissory notes, and that accordingly, this Debt Exchange Agreement shall in no way effect the rights of any other holders of the Company’s outstanding convertible promissory notes. The Company further acknowledges that the Noteholder is making no representations, warranties or covenants on behalf of such other holders of the Company’s outstanding convertible promissory notes.
(h)OTC Compliance. The Company is in compliance with applicable continued listing requirements of OTCID tier of the OTC Markets (the “OTCID”). There are no proceedings pending or, to the Company’s knowledge, threatened against the Company relating to the continued listing of the Common Stock on the OTCID and the Company has not received any notice of, nor to the Company’s knowledge is there any basis for, the delisting of the Common Stock from the OTCID.
6.Representations and Warranties of the Noteholder. As of the date of this Debt Exchange Agreement and as of the Closing, Noteholder hereby represents and warrants to the Company that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. If the Noteholder is an entity, the Noteholder is duly organized, validly existing and in good standing under, and by virtue of, the laws of its jurisdiction of formation.
(b)Corporate Power. If the Noteholder is an entity, the Noteholder has all power and authority to execute and deliver this Debt Exchange Agreement, purchase the Exchange Shares, effect the Debt Exchange, and carry out and perform its obligations under the terms of this Debt Exchange Agreement and the transactions contemplated hereby.
(c)Authorization. If the Noteholder is an entity, all corporate action on the part of the Noteholder necessary for the authorization, execution, delivery and performance of this Debt Exchange Agreement, the purchase of the Exchange Shares, the Debt Exchange, and the performance of all of the Noteholder’s obligations hereunder have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Noteholder and constitutes the valid and legally binding obligation of the Noteholder, enforceable against the Noteholder in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)For the Noteholder’s Account. The Noteholder represents and confirms that the Exchange Shares to be issued to the Noteholder hereunder are being and will be acquired for the Noteholder’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof.
(e)Accredited Investor and Investment Experience. The Noteholder is an “Accredited Investor,” as such term is defined in Regulation D promulgated under the Securities Act. The Noteholder represents that is and its representatives are experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development as the Company and that the Noteholder can bear the economic risk of an investment in the Exchange Shares and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Exchange Shares.
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7.Calculation of Exchange Shares. The number of Exchange Shares to be issued in the debt Exchange shall equal the Conversion Amount divided by $1,200.00 per share.
8.Covenants.
(a)Removal of Legend. The Company covenants to cause its transfer agent to remove any restrictive legends on the Conversion Shares within two (2) business days of the date when such Conversion Shares are freely transferrable by the Noteholder under Rule 144 of the Securities Act.
(b)Indemnification. Each party shall defend, indemnity and hold harmless the other party and its officers, directors, employees, owners, insurers and agents against all obligations, demands, claims and liabilities claimed or asserted by any other party (collectively, “Claims”) in connection with the transactions contemplated by this Debt Exchange Agreement. The Company agrees to promptly reimburse the Noteholder for its reasonable costs and expenses, including attorneys’ fees and legal expenses, incurred in connection with the enforcement of this Debt Exchange Agreement.
(c)Continuous Listing of Common Shares. The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on the OTCID, or on a national securities exchange, and, in accordance therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the OTCID, or such national securities exchange, as applicable.
9.Termination. This Debt Exchange Agreement may be terminated at any time prior to the Closing:
(a)by the mutual written consent of the Company and the Noteholder;
(b)by the Noteholder by written notice to the Company if the Noteholder is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Company pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(a) and such breach, inaccuracy or failure has not been cured by the Company within two (2) days of the Company’s receipt of written notice of such breach from the Noteholder;
(c)by the Company by written notice to the Noteholder if the Company is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Noteholder pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(b) and such breach, inaccuracy or failure has not been cured by the Noteholder within two (2) days of the Noteholder’s receipt of written notice of such breach from the Company; or
(d)by the Company or the Noteholder in the event that (i) there shall be any law that makes consummation of the transactions contemplated by this Debt Exchange Agreement illegal or otherwise prohibited, or (ii) any governmental authority shall have issued a governmental order restraining or enjoining the transactions contemplated by this Debt Exchange Agreement, and such governmental order shall have become final and non-appealable.
10.Effect of Termination. In the event of the termination of this Debt Exchange Agreement in accordance with Section 9, this Debt Exchange Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a)as set forth in this Section 10 and Section 9(d) hereof; and
(b)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.
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For the sake of clarity, (i) until the Closing, the Convertible Note, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms, and (ii) in the event that this Debt Exchange Agreement is terminated, the Convertible Note, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms.
11.Miscellaneous.
(a)Survival of Representations, Warranties and Covenants. The warranties, representations and covenants of the Company and of the Noteholder contained in or made pursuant to this Debt Exchange Agreement shall survive the execution and delivery of this Debt Exchange Agreement and the Closing.
(b)Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Debt Exchange Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Debt Exchange Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Debt Exchange Agreement, except as expressly provided in this Debt Exchange Agreement.
(c)Governing Law. This Debt Exchange Agreement is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada.
(d)Counterparts. This Debt Exchange Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures received by pdf shall be deemed to be original signatures.
(e)Titles and Subtitles. The titles and subtitles used in this Debt Exchange Agreement are used for convenience only and are not to be considered in construing or interpreting this Debt Exchange Agreement.
(f)Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Debt Exchange Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile or email, on the date of transmission with receipt of a transmittal confirmation, or (c) if by international courier service, on the second (2nd) business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service. A party may change or supplement the addresses provided in this Debt Exchange Agreement, or designate additional addresses, for purposes of this Section 11(f) by giving the other party written notice of the new address in the manner set forth above.
(g)Amendments and Waivers. Any term of this Debt Exchange Agreement may be amended and the observance of any term of this Debt Exchange Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and the Noteholder.
(h)Severability. If one or more provisions of this Debt Exchange Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Debt Exchange Agreement and the balance of this Debt Exchange Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
(i)Entire Agreement. This Debt Exchange Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, being the duly authorized representative of the Company, has executed this Debt Exchange Agreement as of the date set forth above.
| COMPANY: | |
| IIOT-OXYS, INC. | |
| By: /s/ Clifford L. Emmons_____________________ | |
| Name: Clifford L. Emmons | |
| Title: CEO |
The undersigned, desiring to enter into the Debt Exchange Agreement, as of the date set forth above, hereby agrees to convert the entire Conversion Amount set forth below into the number of Exchange Shares set forth below. The undersigned specifically acknowledges having read the representations section in the Debt Exchange Agreement entitled “Representations and Warranties of the Noteholder” and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned.
| NOTEHOLDER (individual) | NOTEHOLDER (entity) | |
| /s/ Vidhyadhar Mitta | ||
| Signature | Name of Entity | |
| Vidhyadhar Mitta | ||
| Print Name | Signature | |
| Signature (if Joint Tenants or Tenants in Common) | Print Name | |
| Title | ||
| 8/2/19 | ||
| Date of Purchase | Date of Purchase | |
| $125,000 | ||
| Principal Amount of Convertible Note | Principal Amount of Convertible Note | |
| 12% | ||
| Interest Rate (per annum) | Interest Rate (per annum) | |
| 2/2/26 | ||
| Maturity Date | Maturity Date | |
| $216,156 | ||
| Conversion Amount | Conversion Amount | |
| 180 | ||
| Number of Exchange Shares (@ $1,200.00 per share) | Number of Exchange Shares (@ $1,200.00 per share) |
| 7 |
Exhibit 10.32
DEBT EXCHANGE AGREEMENT
THIS DEBT EXCHANGE AGREEMENT (this “Debt Exchange Agreement”), dated as of October 30, 2025, is entered into by, between, and among IIOT-OXYS, Inc., a Nevada corporation with its principal offices at 705 Cambridge St., Cambridge, MA 01241 (the “Company”), and the noteholders set forth on the signature page hereto (the “Noteholders”).
WHEREAS, as of the date set forth on the signature page hereto, the Noteholders purchased senior secured convertible promissory notes of the Company (the “Convertible Notes”) in the principal amount set forth on the signature page hereto, with an interest rate set forth on the signature page hereto, pursuant to the terms of the Securities Purchase Agreements (the “Securities Purchase Agreements”), by and among the Company and the Noteholders;
WHEREAS, in order to induce the Noteholders to purchase the Convertible Notes, as provided for in the Securities Purchase Agreement, the Company agreed to grant a security interest to the Noteholders in and to certain collateral of the Company (the “Collateral”) in order to secure the prompt and complete payment, observance and performance of under the Convertible Notes, pursuant to the terms of the Security Agreements (the “Security Agreements”), by and among the Company and the Noteholders;
WHEREAS, each Convertible Note’s maturity date (as it may have been amended to date, the “Maturity Dates”), is set forth on the signature page hereto;
WHEREAS, each Convertible Note’s conversion rate (as it may have been amended to date, the “Conversion Rates”), is set forth on the signature page hereto;
WHEREAS, the aggregate amount of principal and interest that will be due and payable under each Convertible Note as of the Maturity Dates (the “Conversion Amounts”) is set forth on the signature page hereto; and
WHEREAS, the Company and the Noteholders desire to convert the entire Conversion Amounts into the number of shares of Series E Preferred Stock of the Company set forth on the signature page hereto (the “Exchange Shares”), at the Stated Value per Exchange Share (as stated in the Certificate of Designation for the Series E Preferred Stock).
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1.The Debt Exchange.
(a)Issuance of Exchange Shares; Cancellation of Indebtedness. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Company shall issue the Exchange Shares to the Noteholders in exchange for the cancellation of all indebtedness of the Company owed to the Noteholders as evidenced by the Convertible Notes, and for no additional consideration (the “Debt Exchange”).
(b)General Release. Subject to the terms and conditions of this Debt Exchange Agreement, at the Closing (as defined below), the Noteholders hereby release, waive, discharge and relinquish any and all rights, claims, demands, contentions and causes of action of every kind, nature, character and description whatsoever, whether known or unknown, suspected or unsuspected, apparent or concealed, fixed or contingent, arising from the Convertible Notes, the Securities Purchase Agreements, and the Security Agreements (collectively, the “Debt Documents”) on or before the Closing Date, which it now has or hereafter may be entitled to claim against the Company, its directors, officers, managers, members, agents, attorneys, and employees (the “Released Parties”), including but without limiting the generality of foregoing, all claims arising from or in connection with or otherwise resulting from any matter, event, state of facts, claim, contention or cause whatsoever, occurring or existing in connection with or relating to the Debt Documents on or before the Closing Date (collectively, the “Claims”). The Noteholders agree that the waiver and release described in this Section 1(b) applies to all Claims, whether or not the Noteholders currently know about them or suspect that they exist. Notwithstanding anything to the contrary expressed or implied herein, however, none of the foregoing released Claims shall include any claims against a Released Party arising by reason of such Released Party’s breach of this Debt Exchange Agreement. In addition, none of the foregoing releases extend to any breach of the Debt Exchange Agreement, and no remedies for any such breach are being released herein.
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(c)Release of Security Interest and Termination of Senior Secured Promissory Note. At the Closing the Noteholders as full and final payment of the Convertible Notes, hereby (i) irrevocably and unconditionally releases and forever discharges, from and as of the date hereof, (A) its security interest (including any lien, claim or encumbrances related thereto) in the Company, (B) its security interest (including any lien, claim or encumbrances related thereto) in the Collateral, (C) the obligations of the Company under the Convertible Notes, and (ii) agrees that each of the Convertible Notes and the Security Agreements are hereby terminated and shall be of no further force and effect without the necessity of any further action on the part of the Company, the Noteholders or any other person.
(d)Fractional Exchange Shares. The Exchange Shares shall be issued in full satisfaction and payment of all indebtedness of the Company owed to the Noteholders as evidenced by the Convertible Notes. In the event that, as a result of the Debt Exchange, fractional Exchange Shares would be required to be issued, such fractional Exchange Shares shall be rounded up or down to the nearest whole share.
(e)Section 3(a)(9) Exchange Offer. It is the intent of the Company that the Debt Exchange be effectuated pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), pursuant to Section 3(a)(9) thereunder, and that, therefore, the holding period of the Convertible Notes will, for securities law purposes, be tacked to the holding period of the Exchange Shares. In this regard, the Company covenants to use its best efforts to cause its transfer agent to issue certificates representing shares of Common Stock issued upon the conversion of the Exchange Shares (the “Conversion Shares”) without any restricted legend, and, if required by the transfer agent, to obtain an opinion of counsel addressed to the transfer agent to that effect.
2.Closing Deliveries.
(a)At the Closing, the Company shall deliver to the Noteholders:
(i)book entry shares in the name of the Noteholders, or the Noteholders’ designees, representing the Exchange Shares, free and clear of all liens and encumbrances; and
(ii)such other documents, certificates or other information as the Noteholders or their counsel may reasonably request.
(b)At the Closing, the Noteholders shall deliver to the Company:
(i)the original Convertible Notes, for cancellation. Without limiting the generality of the foregoing, at the Closing, the Noteholders acknowledges that the Exchange Shares include consideration for the payment of all future interest due on or before the Maturity Dates under the Convertible Notes; and
(ii) such other documents, certificates or other information as the Company or its counsel may reasonably request.
3.The Closing. The closing of the Debt Exchange shall occur as the parties hereto agree upon the satisfaction of the conditions to closing set forth in Section 4 below (other than conditions to be satisfied at Closing) (the “Closing” and, the date on which the Closing actually occurs the “Closing Date”).
4.Conditions to Closing.
(a)Conditions to the Noteholders’ Obligations. The obligations of the Noteholders to consummate the transactions contemplated hereby are subject to the fulfillment by the Company prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Noteholders:
(i)The representations and warranties of the Company contained in Section 5 shall be true and correct on and as of the date of the Closing.
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(ii)The Company shall have performed or fulfilled all agreements and obligations contained herein that are required to be performed or fulfilled by the Company prior to the Closing.
(iii)The Company shall have complied with, and the Debt Exchange shall be effective under, all federal and state securities laws applicable to the Debt Exchange. All authorizations, approvals or permits, if any, of any governmental authority or regulatory body of the United States or any state or foreign country that are required in connection with the Exchange shall be duly obtained and effective.
(iv)All corporate and other proceedings required to be taken by the Company in connection with the Exchange and the other transactions contemplated hereby and all documents incident thereto shall have been duly and validly taken, and all necessary consents, approvals or authorizations required to be obtained by the Company on or prior to the Closing shall have been obtained.
(b)Conditions to the Company’s Obligations. The obligations of the Company to consummate the transactions contemplated hereby are subject to the fulfillment by Noteholders prior to, or at, the Closing of each of the following conditions, any of which may be waived in writing by the Company:
(i)The representations and warranties of the Noteholders contained in Section 6 shall be true and correct on and as of the date of the Closing.
(iii)The Noteholders shall have performed or fulfilled all agreements, obligations and conditions contained herein and required to be performed or fulfilled by it before the Closing.
5.Representations and Warranties of the Company. As of the date of this Debt Exchange Agreement and as of the Closing, the Company hereby represents and warrants to the Noteholders that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. The Company is a corporation duly organized, validly existing under, and by virtue of, the laws of the State of Nevada, and is in good standing under such laws. The Company has all requisite corporate power and authority to own and operate its properties and assets and to carry on its business as presently conducted and as proposed to be conducted.
(b)Corporate Power. The Company has all requisite legal and corporate power and authority to execute and deliver this Debt Exchange Agreement and the other agreements contemplated hereby, to sell and issue the Exchange Shares, and to carry out and perform its obligations under the terms of this Debt Exchange Agreement and the Debt Exchange.
(c)Authorization. All corporate action on the part of the Company and its officers, directors and stockholders necessary for the (i) authorization, execution, delivery and performance of this Debt Exchange Agreement, (ii) authorization, sale, issuance and delivery of the Exchange Shares, and (iii) performance of all of the Company’s obligations hereunder, have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Company and constitutes (or will constitute) the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)No Conflicts; Consents. The execution, delivery and performance by the Company of this Debt Exchange Agreement and the documents to be delivered hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the articles of incorporation or bylaws of the Company, as such have been amended to date; (b) violate or conflict with any judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company; (c) conflict with, or result in (with or without notice or lapse of time or both) any violation of, or default under, or give rise to a right of termination, acceleration or modification of any obligation or loss of any benefit under any agreement or other instrument to which the Company is a party, including without limitation the Convertible Notes. No consent, approval, waiver or authorization is required to be obtained by the Company from any person in connection with the execution, delivery and performance by the Company of this Debt Exchange Agreement or the consummation of the transactions contemplated hereby or thereby.
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(e)Valid Issuance of Stock. The Exchange Shares have been duly authorized and, when issued, sold and delivered in compliance with the provisions of this Debt Exchange Agreement, will be duly and validly issued, fully paid and nonassessable and issued in compliance with applicable federal and state securities laws. The Exchange Shares will be free and clear of any liens or encumbrances; provided, however, that the Exchange Shares shall be subject to restrictions on transfer under state and/or federal securities laws. None of the Exchange Shares will be subject to any preemptive rights or rights of first refusal.
(f)Exemption. It is the intention of the Company that the Debt Exchange be made pursuant to an exemption from the registration requirements of the Securities Act pursuant to Section 3(a)(9) thereunder.
(g)Not Acting for Others. The Company acknowledges that the Noteholders are acting in their individual capacities hereunder and not for any other holders of the Company’s outstanding convertible promissory notes, and that accordingly, this Debt Exchange Agreement shall in no way effect the rights of any other holders of the Company’s outstanding convertible promissory notes. The Company further acknowledges that the Noteholders are making no representations, warranties or covenants on behalf of such other holders of the Company’s outstanding convertible promissory notes.
(h)OTC Compliance. The Company is in compliance with applicable continued listing requirements of OTCID tier of the OTC Markets (the “OTCID”). There are no proceedings pending or, to the Company’s knowledge, threatened against the Company relating to the continued listing of the Common Stock on the OTCID and the Company has not received any notice of, nor to the Company’s knowledge is there any basis for, the delisting of the Common Stock from the OTCID.
6.Representations and Warranties of the Noteholders. As of the date of this Debt Exchange Agreement and as of the Closing, the Noteholders jointly and severally hereby represent and warrant to the Company that the following representations and warranties are true and complete as of each respective date:
(a)Organization and Standing. If the Noteholders are entities, the Noteholders are duly organized, validly existing and in good standing under, and by virtue of, the laws of their jurisdiction of formation.
(b)Corporate Power. If the Noteholders are entities, the Noteholders have all power and authority to execute and deliver this Debt Exchange Agreement, purchase the Exchange Shares, effect the Debt Exchange, and carry out and perform its obligations under the terms of this Debt Exchange Agreement and the transactions contemplated hereby.
(c)Authorization. If the Noteholders are entities, all corporate action on the part of the Noteholder necessary for the authorization, execution, delivery and performance of this Debt Exchange Agreement, the purchase of the Exchange Shares, the Debt Exchange, and the performance of all of the Noteholders’ obligations hereunder have been taken or will be taken prior to the Closing. This Debt Exchange Agreement has been duly executed by the Noteholders and constitutes the valid and legally binding obligation of the Noteholders, enforceable against each Noteholder in accordance with its terms, subject to the laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies.
(d)For the Noteholders’ Accounts. The Noteholders represent and confirm that the Exchange Shares to be issued to the Noteholders hereunder are being and will be acquired for each Noteholder’s own account, not as nominee or agent, and not with a view to the resale or distribution of any part thereof.
(e)Accredited Investor and Investment Experience. Each Noteholder is an “Accredited Investor,” as such term is defined in Regulation D promulgated under the Securities Act. Each Noteholder represents that is and its representatives are experienced in evaluating and investing in private placement transactions of securities of companies in a similar stage of development as the Company and that each Noteholder can bear the economic risk of an investment in the Exchange Shares and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of the investment in the Exchange Shares.
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7.Reserved.
8.Covenants.
(a)Removal of Legend. The Company covenants to cause its transfer agent to remove any restrictive legends on the Conversion Shares within two (2) business days of the date when such Conversion Shares are freely transferrable by any Noteholder under Rule 144 of the Securities Act.
(b)Indemnification. Each party shall defend, indemnity and hold harmless the other party and its officers, directors, employees, owners, insurers and agents against all obligations, demands, claims and liabilities claimed or asserted by any other party (collectively, “Claims”) in connection with the transactions contemplated by this Debt Exchange Agreement. The Company agrees to promptly reimburse each Noteholder for its reasonable costs and expenses, including attorneys’ fees and legal expenses, incurred in connection with the enforcement of this Debt Exchange Agreement.
(c)Continuous Listing of Common Shares. The Company will use commercially reasonable efforts to continue the listing and trading of its Common Stock on the OTCID, or on a national securities exchange, and, in accordance therewith, will use commercially reasonable efforts to comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the OTCID, or such national securities exchange, as applicable.
9.Termination. This Debt Exchange Agreement may be terminated at any time prior to the Closing:
(a)by the mutual written consent of the Company and each Noteholder;
(b)by the Noteholders by written notice to the Company if the Noteholders are not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Company pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(a) and such breach, inaccuracy or failure has not been cured by the Company within two (2) days of the Company’s receipt of written notice of such breach from the Noteholders;
(c)by the Company by written notice to each Noteholder if the Company is not then in material breach of any provision of this Debt Exchange Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by the Noteholder pursuant to this Debt Exchange Agreement that would give rise to the failure of any of the conditions specified in Section 4(b) and such breach, inaccuracy or failure has not been cured by the Noteholder within two (2) days of the Noteholders’ receipt of written notice of such breach from the Company; or
(d)by the Company or the Noteholders in the event that (i) there shall be any law that makes consummation of the transactions contemplated by this Debt Exchange Agreement illegal or otherwise prohibited, or (ii) any governmental authority shall have issued a governmental order restraining or enjoining the transactions contemplated by this Debt Exchange Agreement, and such governmental order shall have become final and non-appealable.
10.Effect of Termination. In the event of the termination of this Debt Exchange Agreement in accordance with Section 9, this Debt Exchange Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except:
(a)as set forth in this Section 10 and Section 9(d) hereof; and
(b)that nothing herein shall relieve any party hereto from liability for any willful breach of any provision hereof.
For the sake of clarity, (i) until the Closing, the Convertible Notes, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms, and (ii) in the event that this Debt Exchange Agreement is terminated, the Convertible Notes, and the parties’ rights and obligations thereunder, shall remain in effect in accordance with their respective terms.
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11.Miscellaneous.
(a)Survival of Representations, Warranties and Covenants. The warranties, representations and covenants of the Company and of each Noteholder contained in or made pursuant to this Debt Exchange Agreement shall survive the execution and delivery of this Debt Exchange Agreement and the Closing.
(b)Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Debt Exchange Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Debt Exchange Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Debt Exchange Agreement, except as expressly provided in this Debt Exchange Agreement.
(c)Governing Law. This Debt Exchange Agreement is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada.
(d)Counterparts. This Debt Exchange Agreement may be executed in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument. Signatures received by pdf shall be deemed to be original signatures.
(e)Titles and Subtitles. The titles and subtitles used in this Debt Exchange Agreement are used for convenience only and are not to be considered in construing or interpreting this Debt Exchange Agreement.
(f)Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Debt Exchange Agreement shall be in writing and shall be conclusively deemed to have been duly given (a) if delivered personally, when received, (b) if transmitted by facsimile or email, on the date of transmission with receipt of a transmittal confirmation, or (c) if by international courier service, on the second (2nd) business day following the date of deposit with such courier service, or such earlier delivery date as may be confirmed in writing to the sender by such courier service. A party may change or supplement the addresses provided in this Debt Exchange Agreement, or designate additional addresses, for purposes of this Section 11(f) by giving the other party written notice of the new address in the manner set forth above.
(g)Amendments and Waivers. Any term of this Debt Exchange Agreement may be amended and the observance of any term of this Debt Exchange Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and each Noteholder.
(h)Severability. If one or more provisions of this Debt Exchange Agreement are held to be unenforceable under applicable law, such provision shall be excluded from this Debt Exchange Agreement and the balance of this Debt Exchange Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms.
(i)Entire Agreement. This Debt Exchange Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter hereof and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned, being the duly authorized representative of the Company, has executed this Debt Exchange Agreement as of the date set forth above.
| COMPANY: | |
| IIOT-OXYS, INC. | |
| By: /s/ Clifford L. Emmons____________________ | |
| Name: Clifford L. Emmons | |
| Title: CEO |
The undersigned, desiring to enter into the Debt Exchange Agreement, as of the date set forth above, hereby agrees to convert the entire Conversion Amount set forth below into the number of Exchange Shares set forth below. The undersigned specifically acknowledges having read the representations section in the Debt Exchange Agreement entitled “Representations and Warranties of the Noteholders” and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned.
| NOTEHOLDER (individual) | NOTEHOLDER (entity) | |
| /s/ Sergey Gogin | YVSGRAMORAH, LLC | |
| Signature | Name of Entity | |
| Sergey Gogin | /s/ Sergey Gogin | |
| Print Name | Signature | |
| Sergey Gogin | ||
| Signature (if Joint Tenants or Tenants in Common) | Print Name | |
| Title: President | ||
| 1/22/18 | 3/6/19 | |
| Date of Purchase | Date of Purchase | |
| $500,000 | $50,000 | |
| Principal Amount of Convertible Note | Principal Amount of Convertible Note | |
| 12% | 12% | |
| Interest Rate (per annum) | Interest Rate (per annum) | |
| 3/1/26 | 3/1/26 | |
| Maturity Date | Maturity Date | |
| $522,195 (includes Conversion Amount of YVSGRAMORAH note) | -- | |
| Conversion Amount | Conversion Amount | |
| 489 (includes Number of Exchange Shares of YVSGRAMORAH note) | -- | |
| Number of Exchange Shares | Number of Exchange Shares |
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Exhibit 10.36
ASSET TRANSFER AGREEMENT
This ASSET TRANSFER AGREEMENT (the “Agreement”) is entered into as of October 29th, 2025 (the “Effective Date”), by and between:
| • | Aingura IIoT, S.L., a company incorporated under the laws of Spain, with its principal office at Paseo Mikeletegi 43, San Sebastián , Gipuzkoa, 20009, Spain (“Aingura”), and |
| • | IIOT-OXYS, Inc., a Nevada corporation, together with its subsidiaries including Oxys Corporation and HereLab, Inc. (“OXYS”), with its principal office at 705 Cambridge Street, Cambridge, MA 02141. |
Aingura and OXYS are each referred to herein as a “Party” and collectively as the “Parties.”
RECITALS
WHEREAS, OXYS is indebted to Aingura in the amount of thirty thousand, eight hundred forty three U.S. Dollars (USD $ 30,843) for accounts payable (the “AP Balance”);
WHEREAS, OXYS desires to satisfy the AP Balance by transferring certain assets to Aingura, subject to the terms and conditions set forth herein;
WHEREAS, the Parties acknowledge that the timing of such asset transfer is contingent upon the closing of the transaction between OXYS and RIG (the “GHS Deal”), and that certain assets must remain with OXYS until new officers of OXYS contribute additional assets to the public company, to ensure that OXYS does not enter into “shell” company status;
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, the Parties agree as follows:
| 1. | TRANSFER OF ASSETS |
| 1.1 | Transferred Assets. Upon the satisfaction of the conditions set forth in Section 2 below, OXYS shall transfer, assign, and deliver to Aingura, and Aingura shall accept from OXYS, all of OXYS’s right, title, and interest in and to the assets described below (collectively, the “Assets”): |
| (a) | Data Assets. |
| • | Data collected and stored, and continuing to be collected and stored, on the Reservoir Bridge Monitoring Site; |
| • | Ongoing operation and real-time data collection and visualization of the Salisbury Bridge Monitoring Site; |
| • | Subject to the verbal agreement with MassDOT’s main contractor that permits OXYS to collect and use such data as long as the sites remain operational (with no funding obligation from MassDOT or its contractor). |
| • | Carrying costs: approximately USD $512/month, which Aingura shall assume. |
| • | Aingura will be the only user of the data assets from the moment of the signature of the present agreement. |
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| (b) | Software and Code Assets. |
| • | All source code, algorithms, and related intellectual property developed for OXYS’s data monitoring projects, including but not limited to the Takeda pharmaceutical project and the Chocolog shear joint degradation bridge monitoring project. |
| • | Includes all code repositories (e.g., GitHub) and associated documentation. |
| • | Carrying costs: minimal hosting charges, to be assumed by Aingura. |
| (c) | Sales and Marketing Collateral. |
| • | Prospect contact lists, presentations, and social media marketing content developed by OXYS. |
| (d) | Hardware Assets. |
| • | Remaining electronic, electrical, and mechanical equipment (including sensors), of minimal estimated value in aggregate. |
| (e) | Aingura Equipment in Possession of OXYS. |
| • | One Aingura Insights “black box,” including pressure sensor, modem, and cables; |
| • | Additional processors and sensor interfaces (in possession of Stephen Mario Martin), status to be confirmed. |
| 1.2 | Excluded Assets. Any assets not specifically listed above are excluded from this Agreement. |
| 2. | CONDITIONS TO TRANSFER |
| 2.1 | Timing. The transfer of the Assets shall occur only after the closing of the RIG (GHS Deal) and once the new officers of OXYS have contributed additional assets sufficient to prevent OXYS from becoming a shell company. |
| 2.2 | Escrow. |
| (a) | Until the Asset transfer occurs, OXYS shall cause USD $30,843 worth of Series E Convertible Preferred Stock of OXYS (the “Escrow Shares”) to be placed in escrow in favor of Aingura. | |
| (b) | Upon transfer of the Assets in accordance with this Agreement, the Escrow Shares shall be returned to OXYS. | |
| (c) | If the transfer of Assets does not occur within three (3) months of the Effective Date (or such later date as mutually agreed), Aingura shall be entitled to retain the Escrow Shares as full satisfaction of the AP Balance. |
| 3. | REPRESENTATIONS AND WARRANTIES |
| 3.1 | By OXYS. OXYS represents and warrants that: |
| (a) | It is the sole and lawful owner of the Assets, free and clear of liens or encumbrances (other than the MassDOT verbal agreements disclosed above); | |
| (b) | It has full authority to transfer the Assets; | |
| (c) | The execution of this Agreement has been duly authorized by all necessary corporate action. |
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| 3.2 | By Aingura. Aingura represents and warrants that: |
| (a) | It has the full right, power, and authority to enter into this Agreement; | |
| (b) | The execution of this Agreement has been duly authorized by all necessary corporate action. |
| 4. | ASSUMPTION OF COSTS |
| Upon transfer, Aingura shall assume responsibility for all ongoing costs of carrying the Assets, including but not limited to the monthly site maintenance charges (USD $512/month) and any hosting or repository fees. Aingura has the option to find alternate suppliers to provide the “cost of carry & maintenance” for maintaining the data & code assets. |
| 5. | MISCELLANEOUS |
| 5.1 | Governing Law. This Agreement shall be governed by and construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada. |
| 5.2 | Entire Agreement. This Agreement constitutes the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements. No party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein. |
| 5.3 | Amendments. This Agreement may be amended only by a written instrument signed by both Parties. |
| 5.4 | Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one instrument. |
| 3 |
SIGNATURES
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
AINGURA IIoT, S.L.
By: /s/ Rafael D. Ibeas
Name: Rafael D. Ibeas Title: CEO
IIOT-OXYS, Inc.
By: /s/ Clifford L. Emmons
Name: Clifford L. Emmons Title: President & CEO
| 4 |
Exhibit 31.1
Certifications
I, Clifford L. Emmons, certify that:
| 1. | I have reviewed this Form 10-K for the twelve months ended December 31, 2025, of IIOT-OXYS, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 11, 2026
| /s/ Clifford L. Emmons |
Clifford L. Emmons,
Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
Certifications
I, Clifford L. Emmons, certify that:
| 1. | I have reviewed this Form 10-K for the twelve months ended December 31, 2025, of IIOT-OXYS, Inc.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: May 11, 2026
| /s/ Clifford L. Emmons |
Clifford L. Emmons,
Chief Executive Officer
(Principal Financial and Accounting Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the annual report of IIOT-OXYS, Inc. (the “Company”) on Form 10-K for the twelve months ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned principal executive officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: May 11, 2026
| /s/ Clifford L. Emmons |
Clifford L. Emmons,
Chief Executive Officer
(Principal Executive Officer and Principal Financial and Accounting Officer)