On September 30, 2026, American Fusion, Inc. entered into Exchange Agreements with twelve officers, directors, consultants, and advisors. These agreements allow the company to exchange outstanding stock-based compensation rights for newly issued Series C Convertible Preferred Stock. The exchange involves no cash payment from either party.
Under the terms of the agreements, the Company may issue up to 288,000 shares of Series C Preferred Stock in exchange for existing compensation rights with an aggregate maximum contractual value of $2,880,000. Each Holder agreed to exchange their Existing Compensation Right for up to 24,000 shares of Series C Preferred Stock. The accrued compensation is extinguished upon exchange, and the Holders have no further right to the previously issuable Common Stock.
The Series C Preferred Stock was designated by the Board of Directors on October 2, 2026, and filed as the Certificate of Designation with the Secretary of State of Texas. The shares have not been registered under the Securities Act of 1933 and were issued pursuant to an exemption from registration under Section 4(a)(2) and Rule 506 of Regulation D. The issuance relies on representations that the Holders are accredited investors acquiring the securities for their own account.
The Series C Preferred Stock carries a par value of $0.001 per share and is convertible at the Holder's option into one share of Common Stock, subject to adjustments for stock splits or reclassifications. Conversion eligibility begins in the first full calendar quarter after the later of the vesting date or nine months after the original issue date. Holders may convert up to 30% of their original entitlement in each of the first three quarters, with the remaining balance available in the fourth quarter.
Voting rights for the Series C Preferred Stock are attached to the Common Stock as a single class on an as-converted basis. However, no Holder may vote shares on an as-converted basis above 4.99% of the outstanding Common Stock. With respect to dividends and liquidation distributions, the Series C Preferred Stock ranks senior to the Common Stock and junior to the Company's Series A Preferred Stock.
The Company has the option, but not the obligation, to repurchase all or any portion of a Holder's Series C Preferred Stock for cash at 125% of its face value ($12.50 per share). This repurchase option is available only until the earlier of the date the Common Stock begins trading on a national securities exchange or nine months after the original issue date.
Separately, the Company announced the resignation of its independent registered public accounting firm, JV CPA Inc., effective October 1, 2026. The resignation applies to the audit of the fiscal year ending December 31, 2026, and the review of the interim financial information for the quarter ended September 30, 2026. The Company is in the process of engaging MBP Global LLP as the successor accounting firm.
