NOTE 7 - SIMPLE AGREEMENT FOR FUTURE FINANCING (SAFE)

On December 3, 2025, the Company entered into a Simple Agreement for Future Equity (“SAFE”) with Grace Hsu (the “Investor”). Pursuant to the agreement, the Investor agreed to invest $10,000 in the Company in exchange for the right to receive equity securities upon the occurrence of a future qualified financing event, subject to the terms and conditions of the SAFE agreement.

The Company received the investment proceeds of $10,000 on January 22, 2026. The SAFE does not bear interest and has no maturity date. Under the terms of the agreement, the SAFE is expected to convert into equity securities at a conversion price equal to 80% of the price paid by investors in a future qualified financing, or at the valuation cap, if applicable.

The Company evaluated the SAFE under the guidance of ASC 815-40 and concluded that the instrument did not qualify for equity classification because the settlement amount was variable and did not meet the criteria for equity classification. Accordingly, the SAFE was classified as a derivative liability and initially recognized at fair value. The liability was subsequently remeasured to fair value at each reporting date, with changes in fair value recognized in the condensed statements of operations until the instrument was settled.

During the three months ended June 30, 2026, the Company completed the conversion of the outstanding SAFE into shares of its common stock.

On April 1, 2026, pursuant to the Investor’s voluntary election under the terms of the SAFE agreement, Grace Hsu elected to convert approximately 20% of the outstanding SAFE into common stock. Upon approval by the Board of Directors, the Company issued 2,500 shares of common stock at a conversion price of $0.80 per share, representing a contractual conversion amount of $2,000. The carrying amount of the portion of the SAFE liability converted was $2,337, including $337 of cumulative fair value adjustments previously recognized in the condensed statements of operations. Upon conversion, the carrying amount of the SAFE liability was reclassified to common stock and additional paid-in capital, and no additional gain or loss was recognized upon conversion.

On May 16, 2026, Grace Hsu delivered a conversion notice requesting the conversion of the remaining outstanding SAFE into common stock. On June 1, 2026, the Board of Directors approved the conversion and the Company issued 3,200 shares of common stock at a conversion price of $2.50 per share, representing a contractual conversion amount of $8,000. The carrying amount of the remaining SAFE liability immediately prior to conversion was $9,346, including $1,346 of cumulative fair value adjustments previously recognized in the condensed statements of operations. Upon conversion, the carrying amount of the liability was reclassified to common stock and additional paid-in capital, and no additional gain or loss was recognized upon conversion.

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