v3.25.2
Convertible Notes, Promissory Notes, Derivative Liability and Warrants
 12 Months Ended
Dec. 31, 2024
Convertible Notes, Promissory Notes, Derivative Liability and Warrants [Abstract]  
CONVERTIBLE NOTES, PROMISSORY NOTES, DERIVATIVE LIABILITY AND WARRANTS

NOTE 10 — CONVERTIBLE NOTES, PROMISSORY NOTES, DERIVATIVE LIABILITY AND WARRANTS

 

Convertible Notes

 

   December 31, 
   2024   2023 
Convertible notes, at amortised cost are as follows:        
Convertible notes at amortised cost  $3,059,595    
     -
 
Less: Deferred debt issuance cost  $648,232    
-
 
Convertible notes, net  $2,411,363    
-
 

 

   December 31, 
   2024   2023 
The convertible notes are repayable as follows:        
Current liability  $82,447    
     -
 
Non-current liability   2,328,916    
-
 
Total  $2,411,363    
 
 

 

As of December 31, 2024, the Company had the following outstanding convertible notes:

 

   Principal   Conversion   Coupon   Issuance  Maturity
Note Holders  Amount   Price   Rate   Date  Date
JAK & affiliated holders  $50,000    0.830    14.75%  April 3, 2024  October 2, 2028
JAK & affiliated holders   1,100,000    0.830    14.75%  August 3, 2024  February 2, 2029
JAK & affiliated holders   500,000    0.950    14.75%  August 30, 2024  March 1, 2029
JAK & affiliated holders   1,500,000    0.686    14.75%  November 11, 2024  May 10, 2029
Total   3,150,000                 

 

During the year ended December 31, 2024, a total of $5,800,000 of convertible promissory notes were issued with a discount of 7%. These Notes are to be settled by way of cash or may be converted to Class A ordinary shares. The conversion of these notes are subject to certain criterions as mentioned in the Convertible Note Agreements, which include a beneficiary cap of 9.9% of shareholdings in the Company by JAK.

As of December 31, 2024, $2,650,000 of convertible notes were converted into 7,020,975 ordinary shares (equivalent to 35,105 post Reverse Stock Splits) by the note holder, thereby increasing our shareholder equity by the same amount.

 

The effective interest expense calculated at 16.96 % amounted to $765,177 and $nil for the year ended December 31, 2024 and December 31, 2023 respectively.

 

The transaction costs incurred on issuance of the Notes are capitalized and amortised over the term of the Notes as follows:

 

Transaction costs on issuance of Notes

 

   December 31, 
   2024   2023 
Balance at beginning of the year  $
-
   $
    -
 
Add: capitalized during the year   929,500    
-
 
Less: amortized during the year   (281,268)   
-
 
Ending balance  $648,232   $
-
 

 

The following table sets forth the Company’s contractual obligations as of December 31, 2024 relating to the convertible notes:

 

   2024 
Convertible bonds-    
2025   516,250 
2026   457,250 
2027   457,250 
2028   507,250 
2029   3,269,625 
Total   5,207,625 

 

Promissory Notes

 

   December 31, 
   2024   2023 
Balance at beginning of the year  $
-
   $
     -
 
Issued during the year   1,453,861    
-
 
Waiver of liability   953,861    
-
 
Ending balance  $500,000   $
-
 

 

As of December 31, 2024, the Company has outstanding non-interest-bearing unsecured promissory notes with a total principal balance of US$500,000, which was settled fully in February 2025.

 

Derivative liability

 

Pursuant to ASC 815, a derivative liability had arisen from the issuance of convertible bonds which have the option of being converted to or exchanged for Class A ordinary shares at any time from date of issuance. The derivative liability is assessed to be a debt requiring to be bifurcated from the host contract and recorded at the fair value.

 

However, the conversion to ordinary shares is subject to certain terms and criteria as set within the Agreement, which includes restriction of conversion if the shareholdings by the note holder before and after the conversion exceeds 9.99%, as revised. As of December 31, 2024, the threshold has been met, and accordingly the derivative is assessed to have no value.

 

Free standing instruments – warrants

 

The convertible bond agreements as mentioned above granted the note holders 6,174,690 series A warrant, 180,722 series B warrant and 3,253,012 series C warrant, allowing the warrant holders to purchase additional Class A ordinary shares at an exercise price of $0.913, $0.001 and $0.924 respectively, subject to adjustments arising from the Reverse Stock Split.

 

The exercise of these warrants is subject to a 9.99% beneficial cap, as revised, which restricts the holder from exceeding shareholdings in excess of the cap in the Company. As of December 31, 2024, the threshold has been met, and accordingly the derivative is assessed to have no value.