Note 7 – Derivative Liabilities

Warrants Granted in June 13, 2025 Note Offering

The Company evaluated the Warrants in accordance with the guidance at ASC 480 and ASC 815-40 and determined that the Warrants are precluded from being considered indexed to the entity’s own stock, resulting in the Warrants being classified as a liability. The measurement of fair value of the Warrants was determined utilizing a Black-Scholes model considering all relevant assumptions current at the date of issuance (i.e., share price of $0.02, exercise price of $0.02, term of three years, volatility of 173.79 - 298.6%, risk-free rate of 3.48 - 3.80%, and expected dividend rate of 0%).

A roll forward of the derivative liability is as follows:

Convertible Notes Issued Prior to July 1, 2025

The Company evaluated the terms of the Convertible Note issued in June 2025 in accordance with the guidance at ASC 815-40 and determined that prior to conversion, no liability characteristics existed to treat the conversion option as a derivative liability as the note is not yet convertible.

Convertible Notes Issued Subsequent to July 1, 2025

The Company evaluated the terms of the Convertible Note issued subsequent to July 1, 2025 in accordance with the guidance at ASC 815-40 and determined that each of the notes met the criteria necessary for bifurcation and the conversion option was reclassified to derivative liability as follows:

As of December 31, 2025 the balance in derivative liabilities is $828,665 as follows:

A roll forward of the derivative liability is as follows: