Convertible Note |
6 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2026 | ||||
| Convertible Note [Abstract] | ||||
| CONVERTIBLE NOTE |
On August 16, 2024, December 2, 2024, and February 14, 2025, the Company entered into convertible promissory note purchase agreements with a third-party investor pursuant to which it issued an aggregate principal amount of $4,000,000 of convertible promissory notes in a private placement. The notes bear both payment-in-kind ("PIK") and cash interest, with interest rates that increase over the term of the notes, and mature five years from their respective issuance dates. The notes include customary conversion, redemption, and repayment provisions, including conversion upon certain qualified financing and business combination events, optional redemption rights, and mandatory repayment under specified circumstances. The Company elected the fair value option under ASC 825 for the notes; accordingly, the $100,000 of debt issuance costs incurred upon issuance were recognized as interest expense.
On January 2, 2026, the Company entered into an agreement with certain noteholders to extend the maturity date of the notes to March 31, 2026. In consideration for the extension, the Company issued an aggregate of 2,000,000 shares of its common stock to the noteholders. The Company evaluated the amendment under ASC 470-50, Debt Modifications and Extinguishments, and concluded that the transaction represented a debt modification. Accordingly, the fair value of the common shares issued was recognized as a debt modification cost (recorded as an adjustment to the carrying amount of the modified debt). The Company estimated the fair value of the shares using its most recent valuation of common stock of $5.65 per share, as no intervening events, such as a business combination or qualified financing, had occurred prior to December 31, 2025 that would materially affect the valuation. The resulting debt modification cost was amortized to interest expense over the extension period ending March 31, 2026.
The Company repaid all outstanding amounts under the convertible notes, during the three months ended March 31, 2026. As a result, no convertible note liability remained outstanding as of June 30, 2026.
The Company recognized $(540,753) and $391,442 of change in fair value of convertible debt through the payoff dates for the three and six months ended June 30, 2026. For the three and six months ended June 30, 2025, the Company recognized $3,849 and $65,414 of change in fair value of convertible debt. |