CONVERTIBLE NOTE PAYABLE AT FAIR VALUE |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Note Payable At Fair Value | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| CONVERTIBLE NOTE PAYABLE AT FAIR VALUE | NOTE 12 — CONVERTIBLE NOTE PAYABLE AT FAIR VALUE
The following is a summary of a convertible note payable for which the Company elected the fair value option as of December 31, 2025 and 2024:
The Company recorded interest expense related to this convertible note payable at fair value of $39,472 during each of the years ended December 31, 2025 and 2024. In addition, the Company made cash interest payments amounting to $39,472 during each of the years ended December 31, 2025 and 2024, related to this convertible note payable at fair value.
March 4th Note
On March 4, 2020, the Company issued a convertible promissory note to a third-party investor and in exchange received $500,000 (the “March 4th Note”). The Company also agreed to issue a warrant (“Series I Warrant”) to purchase up to 10,000 shares of our common stock at a purchase price of $7.82 per share. The Series I Warrants expired on September 4, 2025. The March 4th Note bears interest at a rate of 8% per annum and matures on March 4, 2030. The Company elected the fair value option to account for the March 4th Note and determined that the Series I Warrant met the criteria to be accounted for as a derivative liability due to its net cash settlement provision upon a fundamental transaction. As such, the Company recorded the fair value on issuance of the March 4th Note and Series I Warrant as $460,000 and $40,000, respectively. The balance of the March 4th Note and any accrued interest may be converted at the noteholder’s option at any time at a purchase price of $7.82 per share of our common stock.
For the years ended December 31, 2025 and 2024, the fair value of the March 4th Note decreased by $50,000 and $35,000, respectively, which were recognized as current period other income in the Company’s consolidated statement of operations under the caption change in fair value of convertible note (as no portion of such fair value adjustment resulted from instrument-specific credit risk).
During the year ended December 31, 2025, the change in fair value of Series I Warrants was inconsequential. For the years ended December 31, 2024, the fair value of the Series I Warrant decreased by $5,000, which was recognized as current period other income in the Company’s consolidated statement of operations under the caption change in fair value of warrant.
As of both December 31, 2025 and 2024, the principal balance of the March 4th Note was $500,000. As of December 31, 2025 and 2024, the fair value of the March 4th Note was $270,000 and $320,000, respectively, and the fair value of the Series I Warrant was nominal. For the years ended December 31, 2025 and 2024, the Company recorded interest expense in the amount of $39,452 in its consolidated statement of operations.
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