DERIVATIVE LIABILITIES

3 Months Ended

Mar. 31, 2026

NOTE 11 – 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 Monte-Carlo model with the following assumptions:

	March 31, 2026			December 31, 2025
Volatility		80	%		90	%
Dividend Yield		0	%		0	%
Risk-free rate		3.68	%		3.41	%
Expected term	1.65 years			1.29 years
Stock price	$	0.70		$	0.68
Conversion price	$	0.984		$	0.984
Derivative liability fair value	$	3,777,864		$	3,463,727
Number of shares issued upon conversion, exercise, or satisfaction of required conditions		14,871,912			11,053,795

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 three months ended March 31, 2026:

Fair value as of December 31, 2025	$	3,463,727
Derivative value for liquidated damages added to principal balance of notes		242,745
Change in fair value of derivatives		71,392
Fair value as of March 31, 2026	$	3,777,864

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 loss of $71,392 during the three months ended March 31, 2026.