Note 6. Notes Payable

December 2023 Note (Extinguished)

On December 19, 2023, the Company exchanged its existing note payable new note (the “December 2023 Note”) with substantially the same terms with the exception of a maturity date of December 31, 2024 and with a conversion feature based on a 40% of the Company’s common stock in a fully diluted basis. The principal balance of the December 2023 Note was $1,579, had a debt discount of $257, and bears interest at a rate of 6% per annum. On November 1, 2024, the Company exchanged the December 2023 Note for a new note (the “November 2024 Note”), and the December 2023 Note was extinguished. The company recorded interest expense of $72 for the year ending December 31, 2024 for this note.

November 2024 Note (Extinguished)

On November 1, 2024, the Company exchanged the December 2023 Note for a new note (the “November 2024 Note”), in the principal amount of $1,620 with an interest of 8% per annum and a maturity date of December 31, 2025 and 750,000,000 shares of common stock. In case of an event of default under the New Secured Exchange Note, interest shall accrue at the lesser of (i) a rate of 12% per annum or (ii) the maximum amount permitted by law, and once the event of default is cured, the interest rate shall revert to 8% per annum. Furthermore, under the terms of the New Secured Exchange Note, an event of default may result, at the holder’s election, in the accelerated maturity of the note, in which case 110% of the principal of and accrued and unpaid interest on the note will automatically become due and payable.

On November 1, 2024, the lender also exchanged all outstanding warrants to purchase 2,043,808,450 shares of common stock for 600,000,000 shares of common stock and 650,000 shares of Series D Preferred Stock. As a result of the exchange, the Company recognized a $4,150 reduction in the fair value of the related warrant derivative liability immediately prior to settlement. The Company determined the fair value of the instruments exchanged as of November 1, 2024. The fair value of the common stock was based on the closing market price of $0.0001 per share on the exchange date. The fair value of the Series D Preferred Stock was estimated using a market based approach that considered its current price of the common stock and then applying the conversion ratio as stipulated in the agreement and then applying a dilution in the fair value. The warrants surrendered were valued immediately prior to the exchange using the Black-Scholes option-pricing model, with key inputs including an expected volatility of 301%, risk-free interest rates of 4.23% to 4.32%, expected terms of 0.86 to 1.72 years, and dividend yield of 0%. Following completion of the exchange, no warrants remained outstanding. The company recorded interest expense of $109 and $25 for the years ending December 31, 2025 and 2024, respectively for this note.

On May 13, 2025, the Company used $400 of the cash proceeds from the sale of its LaFayette, Georgia facility (see Note 5 – Property, Plant and Equipment) to make a partial repayment of principal and accrued interest on the November 2024 Note. After this payment, the outstanding principal balance was $1,220. The November 2024 Note was exchanged for a new Convertible Note of equal face value in September 2025 (refer to “September 2025 Note” section disclosed below).

New Promissory Note (Extinguished)

Also on November 1, 2024, the Company’s lender consolidated three prior short-term loans (totaling $200 principal plus accrued interest) into a single non-convertible promissory note with a principal balance of $242 and an interest rate of 8% per annum (the “New Promissory Note”). The New Promissory Note matures on December 31, 2025.

On May 13, 2025, the Company used $262 of the cash proceeds from the sale of its LaFayette, Georgia facility (see Note 5 – Property, Plant and Equipment) to make full repayment of principal and accrued interest on the New Promissory Note. For the New Promissory Note, the Company recorded interest expense of $9 and $0.3 for the years ending December 31, 2025 and 2024, respectively.

September 2025 Note

On September 22, 2025, the Company entered into a Secured Exchange Note Exchange Agreement with November 2024 Note holder, pursuant to which the parties agreed to exchange the Company’s outstanding November 2024 Note. As of the exchange date, the November 2024 Note had an outstanding principal balance of $1,220, bore interest at 8% per annum, and was scheduled to mature on December 31, 2025. Under the Exchange Agreement, the holder surrendered the 2024 Note in exchange for (i) a new secured convertible promissory note (the “September 2025 Note”) issued in the principal amount of $1,220, bearing interest at 8% per annum and maturing on December 31, 2027, and (ii) 500,000,000 shares of the Company’s common stock. The equity consideration was valued at $0.0001 per share, resulting in a fair value of $50 as of the issuance date. The September 2025 Note is convertible into common shares at $0.001 per share. The company recorded interest expense of $27 and $0 for the years ending December 31, 2025 and 2024, respectively for this note.

The Company reviewed the transaction under ASC 470-50 and concluded that the revised terms do not constitute a substantial modification. Accordingly, the transaction is accounted for as a modification of the existing November 2024 Note. The value of the equity in the transaction was $50 and recorded as a debt discount in accordance with ASC 470. The conversion feature added by the modification was determined to be non-substantive under ASC 470. No gain or loss was recognized as a result of the modification. The note continues to be carried at its previous amortized cost basis, adjusted for the $50 debt discount, which will be amortized over the remaining term of the note. For the year ended December 31, 2025, the Company recorded $6 in accretion of debt discount. As of December 31, 2025, the carrying value of the Note was $1,176, net of unamortized discount of $44.

The September 2025 Note is classified as a long-term liability on the Company's balance sheet, as the maturity date exceeds one year from the reporting date. As of December 31, 2025, there are 1,220,240,000 potentially dilutive shares of common stock issuable upon the conversion of this note. These shares were excluded from the computation of diluted net loss per share for the year ended December 31, 2025, as their inclusion would have been anti-dilutive.

Derivative Liabilities

Prior to November 1, 2024, the Company’s notes included convertible instruments which contained variable conversion and exercise features requiring treatment as derivative liabilities. In connection with the November 2024 debt restructuring, all such conversion features and variable-rate warrants (including Series X, Y, and Z) were extinguished or cancelled.

The Company’s activity in its convertible debt related derivative liability was as follows for the years ended December 31, 2024 and 2025

 Schedule of Derivative Liability Activity

Key valuation inputs used at the November 1, 2024 settlement date were: stock price $0.0001 per share, strike $0.007 – $0.05, risk-free rate 4.23 – 4.32 %, expected volatility ≈ 301 %, expected term 0.86 – 1.72 years, and dividend yield 0 %. Upon completion of the warrant exchange, the derivative liability was fully extinguished.

As the November 2024 Note contained no conversion features, and the subsequent September 2025 Note contains a fixed conversion price not subject to derivative treatment, the Company had no derivative or warrant liabilities during 2025. For the year ended December 31, 2024, the Company recorded a gain on the change in fair value of warrant derivative liability of $4,042 and a gain on change in fair value of derivative liability of $2,914. As of December 31, 2025, and 2024, the fair value of these liabilities was $0.

Warrant Derivative Liabilities

As noted above, all the outstanding warrants as of November 1, 2024 were exchanged by the lender resulting in a gain on settlement from the exchange.

The valuation at the November 1, 2024 exchange date incorporated the following assumptions: stock price $0.0001 per share; strike prices $0.007 – $0.05 per share; risk-free interest rates 4.23 – 4.32 %; expected volatility 301 %; expected terms 0.86 – 1.72 years; dividend yield 0 %. The resulting aggregate fair value of the warrants exchanged was $59,642, as calculated by the Company’s valuation specialist. All warrant derivative liabilities were eliminated upon completion of the exchange.

The Company’s activity in its derivative liabilities was as follows for the year ended December 31, 2024 and 2025:

 Schedule of Warrant Derivative Liabilities

The Company recorded change in fair value of warrant liability in the amount of $4,150 for the year ended December 31, 2024.

Fluctuations in the Company’s stock price are a primary driver for the changes in the derivative valuations during the year ended December 31, 2024. As the stock price increases for each of the related derivative instruments, the value to the holder of the instrument generally increases, therefore increasing the liability on the Company’s balance sheet. Additionally, stock price volatility is one of the significant unobservable inputs used in the fair value measurement of each of the Company’s derivative instruments. The simulated fair value of these liabilities is sensitive to changes in the Company’s expected volatility. Increases in expected volatility would generally result in higher fair value measurement. A 10% change in pricing inputs and changes in volatilities and correlation factors would not result in a material change in our Level 3 fair value.

Loans Payable – Related Party

On August 1, 2023 a former executive loaned the Company $15. The loan bears interest at an annual rate of 4.43%. A maturity date has not yet been set. For the years ended December 31, 2025 and 2024, respectively, the Company recorded $0.6 and $0.6 of interest expense in respect of this loan.