v3.26.1
Convertible Notes Payable
 12 Months Ended
Dec. 31, 2025
Debt Disclosure [Abstract]  
Convertible Notes Payable

 

4. Convertible Notes Payable

        
   December 31, 
   2025   2024 
         
Convertible notes  $822,000   $1,651,000 
Accrued interest   545,000    1,006,000 
Total outstanding debt, including $1,116,000 and $2,339,000 in default at December 31, 2025 and 2024, respectively   1,367,000    2,657,000 
Less: Unamortized debt discount   (16,000)   (133,000)
Total outstanding debt, net of unamortized debt discount  $1,351,000   $2,524,000 

 

Convertible notes

 

At December 31, 2023, convertible notes payable totaled $1,332,000. During the year ended December 31, 2024, the Company issued convertible promissory notes in the aggregate of $1,353,000 for cash proceeds of $1,230,000, net of OID of $123,000. The notes are unsecured, with a 10% original issue discount, mature in twelve months from issuance, and are convertible into 42,457,348 shares of the Company’s common stock at $0.03 to $0.05 per share. In addition, the Company granted the note holders warrants to purchase 42,457,348 shares of the Company’s common stock with a relative fair value of $782,000. The warrants are fully vested and expire one year from the date of issuance. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 1.0 year, stock price of $0.05 to $0.12, exercise price of $0.04 to $0.07, volatility of 156% to 174%, risk-free rate of 3.98% to 5.09%, and no forfeiture rate. Also during 2024, convertible notes of $1,034,000, net of unamortized discount of $699,000, were converted into 32,341,748 shares of common stock. At December 31, 2024, total outstanding convertible notes payable totaled $1,651,000.

 

During the year ended December 31, 2025, the Company issued convertible promissory notes in the aggregate of $2,515,000 for cash proceeds of $2,285,000, net of original issue discount (“OID”) of $229,000. The notes are unsecured, mature in twelve months from issuance, and are convertible into shares of the Company’s common stock at $0.08 per share.

 

In addition, the Company granted the note holders warrants to purchase 31,423,615 shares of the Company’s common stock with a relative value of $1,430,000. The warrants are fully vested, and expire one year from the date of issuance. The Company determined the fair value of the warrants by using a Black-Scholes option pricing model, with the following assumptions: expected term of 1.0 year, stock price of $0.16 to $0.20, exercise price of $0.10, volatility of 136% to 160%, risk-free rate of 3.96% to 4.03%, and no forfeiture rate.

 

Also, during the year ended December 31 2025, convertible notes of $3,344,000, net of unamortized discount of $1,572,000, were converted into 65,523,469 shares of common stock (see also accrued interest below). At December 31, 2025, total outstanding convertible notes payable totaled $822,000. As of December 31, 2025, convertible notes payable and accrued interest are convertible into approximately 16,408,334 shares of common stock at conversion rates ranging from $0.03 to $0.48 per share. As of December 31, 2025, a total of 51 convertible notes and accrued interest in the aggregate of $1,116,000 have reached maturity and are past due.

 

Accrued interest

 

At December 31, 2023, accrued interest on convertible notes payable totaled $793,000. During the year ended December 31, 2024, accrued interest of $213,000 was recorded. At December 31, 2024, accrued interest on convertible notes payable totaled $1,006,000.

 

During the year ended December 31, 2025, accrued interest of $146,000 was recorded. Also, during the year ended December 31 2025, accrued interest on convertible notes of $607,000 was converted into shares of common stock. At December 31, 2025, accrued interest on convertible notes payable totaled $545,000.

 

Debt discount

 

At December 31, 2023, the unamortized debt discount was $25,000. During the year ended December 31, 2024, debt discount of $905,000 was recorded for the relative fair value of warrants of $782,000 and OID of $123,000, debt discount amortization of $98,000 was recorded, and $699,000 of debt discount was removed and included in the carrying amount of related convertible notes payable that were converted into shares of common stock. At December 31, 2024, the unamortized debt discount was $133,000.

 

During the year ended December 31, 2025, debt discount of $1,659,000 was recorded for the relative fair value of warrants of $1,430,000 and OID of $229,000, debt discount amortization of $204,000 was recorded, and $1,572,000 of debt discount was removed and included in the carrying amount of related convertible notes payable that were converted into shares of common stock. At December 31, 2025, the unamortized debt discount was $16,000.