v3.26.1
Derivative Liabilities
 12 Months Ended
Dec. 31, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Liabilities

Note 9. Derivative Liabilities

 

The fair values of the conversion option of outstanding convertible notes payable and common stock warrants were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was estimated using a binomial model with the following assumptions:

               
    As of December 31, 2025  
    Conversion Option     Warrants  
             
Volatility     762.08%       762.08%  
Dividend Yield     0%       0%  
Risk-free rate     3.48%       3.48%  
Expected term     1 year       1 year  
Stock price   $ 0.041     $ 0.041  
Exercise price   $ 0.01     $ 0.01-0.5  
Derivative liability fair value   $ 3,100,316     $ 12,324,245  
Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of December 31, 2025     75,670,000       300,800,000  

 

    As of December 31, 2024  
    Conversion Option     Warrants  
             
Volatility     406.93%       301.31%  
Dividend Yield     0%       0%  
Risk-free rate     4.16%       4.27%  
Expected term     1 year       1.96-2.40 years  
Stock price   $ 0.003     $ 0.003  
Exercise price   $ 0.0004-0.01     $ 0.5  
Derivative liability fair value   $ 1,973,641     $ 19,112  
Number of shares issued upon conversion, exercise, or satisfaction of required conditions as of December 31, 2024     668,516,113       9,530,000  

 

All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820.

 

The table below presents the change in the fair value of the derivative liability during the year ended December 31, 2025 and 2024:

    
Fair value as of December 31, 2023  $197,090 
Extinguishment due to repayment   (232,274)
Change in fair value of derivatives   2,027,937 
Fair value as of December 31, 2024   1,992,754 
Establishment of derivative liability upon issuance of notes   5,876,133 
Establishment of derivative liability on tainted warrants   31,395,924 
Extinguishment due to conversion   (919,356)
Extinguishment due to exercise of warrants   (4,028,465)
Change in fair value of derivatives   (18,892,429)
Fair value as of December 31, 2025  $15,424,561 

 

The total impact of derivative liabilities recognized in the Company’s consolidated statements of operations includes the change in fair value of derivatives, with the Company recognizing a total gain of $18,892,429 during the year ended December 31, 2025 and total loss of $1,795,664 during the year ended December 31, 2024. The fair value of the derivatives related to the principal default on the notes was charged directly to interest expense. In addition, as a result of the default, all other potentially dilutive instruments must also be recorded at fair value pursuant to ASC 815. The initial fair value of the outstanding warrants was charged to the change in fair value of derivatives.