Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2026 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| Commitments and Contingencies | NOTE 6. Commitments and Contingencies
Registration Rights
The holders of the Private Placement Warrants and Public Warrants that may be issued upon conversion of working capital loans, if any, are entitled to registration rights pursuant to a registration rights agreement dated February 17, 2022. These holders are entitled to certain demand and “piggyback” registration rights. The Company will bear the expenses incurred in connection with the filing of any such registration statements. On May 13, 2025, the Company filed a Registration Statement on Form S-1 to register 2,441 of the outstanding 8,199 Private Placement Warrants, after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business). The Registration Statement was declared effective on May 30, 2025.
Equity Line of Credit (“ELOC”) Agreement
On November 11, 2025, the Company entered into a new Purchase Agreement (the “Second ELOC Agreement”) with Arena Business Solutions AG/RA SA Ltd. (“Arena”). Under the Second ELOC Agreement, the Company has the right, but not the obligation, to direct Arena to purchase up to $100,000,000 in shares of the Company’s common stock (the “ELOC Shares”) upon satisfaction of certain terms and conditions contained in the Second ELOC Agreement, including, without limitation, an effective registration statement filed with the SEC registering the resale of the ELOC Commitment Fee Shares and additional shares to be sold to Arena from time to time under the Second ELOC Agreement.
The term of the Second ELOC Agreement began on November 11, 2025, and ends on the earlier of (i) the first day of the month following the 36-month anniversary of the execution date, (ii) the date on which the Investor shall have purchased the maximum amount of Second ELOC Shares, or (iii) the effective date of any written notice of termination delivered pursuant to the terms of the Second ELOC Agreement (the “Commitment Period”). In consideration for the execution and delivery of the Second ELOC Agreement, the Company is required to issue common shares to Arena equal to $250,000 divided by the lowest 1-Trading Day VWAP of the common shares of the five (5) Trading Days immediately preceding the effectiveness of the initial registration statement (the “Commitment Fee Shares”), plus $25,000 in common shares for fees associated with the prior ELOC Agreement with the Company, based on a price equal to the lowest 1-Trading Day VWAP of the Common Shares of the five (5) Trading Days immediately preceding the date of execution and delivery of this Agreement.
The Company issued shares of common stock after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business) to Arena in November and December 2025 and an additional true up shares in January 2026, after giving effects to the Reverse Splits (see Note 1. Description of Organization and Business), representing payment of the commitment fee shares. For the three and six months ended June 30, 2026, the change in fair value totaled $275 and $865, respectively, and was included as an expense in change in fair value of derivative liabilities and convertible notes on the unaudited condensed consolidated statement of operations, there was no change in fair value for the same period of 2025. At June 30, 2026, and December 31, 2025, the fair value of the forward purchase agreement liability related to the Second ELOC Agreement totaled $96,527 and $95,662, respectively, and is included in forward purchase agreement liability on the accompanying unaudited condensed consolidated balance sheets. There were no issuances under the Second ELOC Agreement as of June 30, 2026.
Instaprin Acquisition
On March 28, 2022, the Company closed on an asset purchase agreement (“APA”) of Instaprin Pharmaceuticals, Inc.’s (“Instaprin”) intangible assets, inclusive of U.S. Patent No. 62/794141, International Publication No. 2020/15460 A1 and WO 2020/150685 A1, and the Instaprin U.S. Trademark No. 86274378, trade secrets and proprietary information, all applications for any of the foregoing, commercial and scientist relationships, and any license or agreements granting rights related to the foregoing.
The purchase price for the Acquired Assets (as defined in the APA) was $3,628,325 plus interest thereon, to be paid to the SEC on behalf of Instaprin in satisfaction of the SEC’s judgment against Instaprin and its former CEO, from sales of the product, as follows: 20% from the first $5,000,000 of sales and 10% from sales thereafter until the entire contingent purchase price obligation is satisfied. Additionally, ten percent (10%) of the Company’s equity was to be delivered at Closing, in proportion to their equity holdings in the Company, to be issued to a Trustee for the former Instaprin Shareholders, along with an additional ten percent (10%) of the Company’s equity to be issued to Instaprin’s service providers, pursuant to a stock incentive plan to be adopted. As of June 30, 2026, the Company has not recorded the assets from the APA due to the contingent nature of the transaction and the Company has not yet adopted a stock incentive plan.
Purchase Agreement
On June 10, 2026, the Company entered into a purchase agreement (the “Purchase Agreement”) with FireFish TopCo, LLC (the “Seller”, and, collectively with its Subsidiaries listed in the Purchase Agreement, “Sellers”), pursuant to which (i) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase or cause certain of its Affiliates to purchase, all of the equity interests in certain of Seller’s subsidiaries of the Purchase Agreement (the aforementioned equity interests, collectively, the ‘Transferred Equity Interests”, and such subsidiaries, “Transferred Entities”), free and clear of all Liens, other than the Permitted Liens and in accordance with the applicable Local Transfer Documents and (ii) the Seller agreed to sell, and cause the applicable Sellers to sell, and the Company agreed to purchase, or cause certain of its affiliates to purchase, all of the assets of the other Business Entities as defined as Transferred Entities, DUS Operating Inc. with respect to the U.S. Enterprise and Automotive Czech with respect to the KOP Enterprise constituting the balance of the Business as defined as the business of designing, manufacturing, marketing and selling automotive systems that facilitate electronic driver control and the migration toward vehicle electrification, safety, light weighting and sustainability, as conducted by the Transferred Entities on June 10,2026, and in respect to (a) Automotive Czech, the business conducted by the KOP Enterprise and (b) DUS Operating Inc., the business conducted by the U.S. Enterprise.
Purchase Price and Consideration: As consideration for such purchase, the Company agreed to pay the Seller (or one or more of its designated other Sellers or Affiliates) at least two (2) Business Days prior to the date of Closing (“Closing Date”) an amount equal to: (i) $30,000,000 (the “Purchase Price”) plus (ii) $800,000 in respect of deferred revenue of the Business Entities (such $800,000 representing an agreed upon fixed credit for the deferred revenue, regardless of the actual amount of the deferred revenue), minus (iii) any Income Tax obligations of the Transferred Entities net of any Income Tax receivables, minus (iv) Indebtedness of the Transferred Entities as of the closing (such final amount, the “Closing Purchase Price”). The Purchase Price will be allocated among the Transferred Entities and/or business units as set forth in the Purchase Agreement. To the extent relevant under applicable Tax Law, the Purchase Price associated with each Transferred Entity and/or business unit will be further allocated among the assets of such Transferred Entities in a manner consistent with Section 1060 of the Internal Revenue Code.
On August 6, 2026, the Company entered into an Escrow and Closing Agreement pursuant to which the parties acknowledged and agreed that all conditions to the closing of the transactions per the Purchase Agreement had been satisfied. (see Note 11. Subsequent Events)
Commitment Letter for Credit Facility
In May 2026, the Company entered into a commitment letter with a national financial institution providing for a senior secured credit facility of Aspire in an aggregate principal amount of up to $22,500,000 (the “Aspire Credit Facility”). Aspire intends to use the proceeds of the Aspire Credit Facility, if consummated, to finance the acquisition of 100% of Dura Driver Control Systems (“DCS”). The Company does not anticipate procuring any new equity raise to consummate the purchase.
The Aspire Credit Facility is expected to consist of a senior secured five-year term loan, at an interest rate equal to 325 basis points above the one-month term Secured Overnight Financing Rate. The final terms of the Aspire Credit Facility, including the senior secured term loan, will be subject to execution of definitive credit documentation and the satisfaction of customary closing conditions. During the three and six months ended June 30, 2026, $75,000 of upfront fee paid to the financial institution is included in deferred financing cost on the unaudited condensed consolidated balance sheets.
Legal Proceedings
The Company is and may be subject to various claims, lawsuits and proceedings in the ordinary course of the Company’s business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company’s financial condition, results of operations or cash flows. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.
Legal Claim
In April 2026, Srirama Associates, LLC filed a lawsuit in the Superior Court of the State of Delaware alleging breach of contract in connection with the modified Promissory Note Fee Agreement. The complaint sought approximately $1,000,000 in damages, plus interest and costs. The Company disputed the claim and filed a motion to dismiss on May 11, 2026. On June 29, 2026, the claim was dismissed with prejudice by the Superior Court of the State of Delaware and the liability of $1,000,000 was written off and included in gain (loss) on extinguishment of debt in the unaudited condensed consolidated statements of operations.
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