NOTE 13 – CONVERTIBLE DEBT AND DERIVATIVE LIABILITY |
3 Months Ended |
|---|---|
Mar. 31, 2026 | |
| Debt Disclosure [Abstract] | |
| NOTE 13 – CONVERTIBLE DEBT AND DERIVATIVE LIABILITY | NOTE 13 – CONVERTIBLE DEBT AND DERIVATIVE LIABILITY
CFI Capital LLC Convertible Note
On September 18, 2025, the Company issued a $150,000 convertible promissory note to CFI Capital LLC bearing interest at 6% per annum and maturing on September 18, 2026. The note is convertible into shares of the Company’s common stock, beginning six months after the issuance date. The conversion price is variable and is set at a significant discount to the market price, equal to 60% of the Company’s lowest trading price during the 15 trading days preceding the conversion date.
The total gross proceeds from the note were $150,000. However, the Company received net cash proceeds of $119,200, after deductions of $5,000 legal fee of the buyer, $10,800 of the placement agent commission, and $15,000 of original issue discount.
The Company elected the fair value model to account for the convertible note. The fair value was calculated using Monte Carlo valuation method. The fair value on issuance day was $158,687.
As of March 31, 2026, fair value was estimated as $166,281.
Labry’s Fund II Convertible Note
On December 10, 2025, the Company issued a $150,000 convertible promissory note to Labrys Fund II, LP bearing interest at 6% per annum and maturing on December 10, 2026. The note is convertible into shares of the Company’s common stock, beginning six months after the issuance date. The conversion price is variable and is set at a significant discount to the market price, equal to 60% of the Company’s lowest trading price during the 15 trading days preceding the conversion date.
The total gross proceeds from the note were $150,000. However, the Company received net cash proceeds of $119,200, after deductions of $3,500 legal fee of the buyer, $1,500 due diligence fee, $10,800 of the placement agent commission, and $15,000 of original issue discount.
The Company elected the fair value model to account for the convertible note. The fair value was calculated using Monte Carlo valuation method. The fair value on issuance day was $157,452.
As of March 31, 2026, fair value was estimated as $162,317.
Boot Capital LLC and Vanquish Funding Group Inc.
On December 18, 2025, the Company issued a $112,000 convertible promissory note to Boot Capital LLC, bearing interest at 12% per annum and maturing on September 15, 2026. The purchase price of the note was $100,000, resulting in net proceeds to the Company of $100,000.
On the same date, the Company issued a $137,760 convertible promissory note to Vanquish Funding Group Inc., also bearing interest at 12% per annum and maturing on September 15, 2026. The purchase price of the note was $123,000. After the deduction of legal fees and placement agent commissions, the Company received net proceeds of $101,000.
Both notes include a conversion feature that becomes exercisable upon the occurrence of certain events of default as stipulated in the respective agreements. Management concluded that the likelihood of such default events occurring is remote; therefore, the value of the conversion feature was determined to be minimal.
For the three months ended March 31, 2026, the Company recognized interest expense of $29,466 related to these notes, calculated using the effective interest rate method over the term of the notes.
Vista Capital Investment Convertible Note
On January 7, 2026, the Company issued a $110,000 convertible promissory note to Vista Capital Investment, LLC bearing interest at 12% per annum and maturing on January 7, 2027. The note is convertible into shares of the Company’s common stock, beginning six months after the issuance date. The conversion price is variable and is set at a significant discount to the market price, equal to 60% of the Company’s lowest trading price during the 15 trading days preceding the conversion date.
The total gross proceeds from the note were $110,000. However, the Company received net cash proceeds of $89,000, after deductions of $11,000 of the placement agent commission and $10,000 of original issue discount.
The Company elected the fair value model to account for the convertible note. The fair value was calculated using Monte Carlo valuation method. The fair value on issuance day was $118,580.
As of March 31, 2026, fair value was estimated as $121,825.
Repayment Contingency
If the Company elects to repay the convertible notes in cash prior to the date the conversion feature becomes exercisable (six months after the issuance date), the embedded derivative would expire unexercised. In such an event, the derivative liability would be derecognized, and the note would be settled at its principal amount plus any accrued interest through the repayment date. No further remeasurement or fair value adjustments would be required after settlement.
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