Debt |
6 Months Ended | ||
|---|---|---|---|
Jun. 30, 2026 | |||
| Debt [Abstract] | |||
| Debt |
Convertible Promissory Notes Payable – Related Party
On March 16, 2020, the Company entered into a Line of Credit (“LOC”) agreement with GPR, a related party and the Company’s majority stockholder. The LOC, as amended, provided for borrowings of up to $52.5 million, bears interest at 10% per annum, matures on March 16, 2027, is secured by substantially all of the Company’s assets, and is convertible into shares of the Company’s common stock at a conversion price of $1.05 per share. On December 31, 2025, GPR converted the then-outstanding $1,727,152 of principal and accrued interest into 1,644,906 shares of restricted common stock at the contractual conversion price, following which all outstanding principal and accrued interest under the LOC were extinguished.
During the three and six months ended June 30, 2026, the Company received cash proceeds of $175,350 and $447,464, respectively, under the LOC (six months ended June 30, 2025: $511,492). The convertible promissory note – related party is presented at its net carrying amount, which equals its outstanding principal balance of $447,464 as of June 30, 2026, as there were unamortized premiums, discounts, or issuance costs.
The stated and effective interest rate on the note is 10% per annum. Interest expense recognized on the convertible promissory note – related party was approximately $11,656 for both the three and six months ended June 30, 2026, all of which represented contractual interest; there was no amortization of premium, discount, or issuance costs. As of June 30, 2026, accrued interest of $11,656 is presented as accrued interest – related party on the condensed consolidated balance sheet. The note is convertible into 426,156 shares of the Company’s common stock at June 30, 2026. See Note 6 – Related Party Transactions.
Promissory Note – LaunchIT
In November 2025, the Company entered into a Share Return, Payment, and SWIS LLC Transfer Agreement (the “LaunchIT Agreement”) with LaunchIT LLC (“LaunchIT”), pursuant to which the Company rescinded its prior acquisition of SWIS LLC. Total consideration was $230,000, consisting of a $125,000 advance payment and a promissory note dated November 21, 2025 in the original principal amount of $105,000 (the “LaunchIT Note”). The LaunchIT Note bore stated interest unless in default and was originally payable in four equal monthly installments of $26,250 due January 1 through April 1, 2026; upon default, overdue amounts accrue interest at 15% per annum and a late fee of $2,500 per missed installment is payable.
The scheduled installments were not paid on their original due dates, and the LaunchIT Note was in default. On May 19, 2026, the Company and LaunchIT entered into a First Amendment to Promissory Note and Waiver of Default (the “Amendment”). Pursuant to the Amendment, the Company paid LaunchIT $15,000 and the parties consolidated the outstanding obligations under the LaunchIT Agreement into an amended principal balance of $165,000. LaunchIT conditionally waived the existing defaults and suspended accrued default interest through the amendment effective date, in each case subject to reinstatement upon a “Springing Default.” A conditional resolution discount of $10,000 will be applied upon full and timely payment of all amounts due, subject to clawback upon a Springing Default. Under the amended schedule, the Company is required to make six monthly installments of $5,000 each from June 30, 2026 through November 30, 2026, with a final payment of the remaining balance due on or before December 31, 2026 (the “Amended Maturity Date”). A Springing Default occurs if the Company fails to pay two consecutive monthly installments or fails to pay the remaining balance by the Amended Maturity Date, upon which all waivers and interest suspensions terminate, suspended default interest retroactively reinstates at 15% per annum from the original default dates, and the resolution discount is clawed back.
As more fully described above, the Company was in default under the original terms of the LaunchIT Note from January 2026 through May 19, 2026 due to the non-payment of four scheduled installments aggregating $105,000 in principal. Pursuant to Regulation S-X Rule 4-08(c), the Company discloses that LaunchIT conditionally waived these defaults through the Amended Maturity Date of December 31, 2026, subject to automatic reinstatement of all waived rights and remedies and of suspended default interest (calculated at 15% per annum, retroactive to the original default dates) upon the occurrence of a Springing Default. As of June 30, 2026, no event of default or Springing Default existed under the LaunchIT Note, as amended, and the Company was current on all obligations thereunder. As of June 30, 2026, the LaunchIT Note is carried at its amended principal balance of $165,000 and is classified as a current liability, and accrued late fees of $12,500 are included within accrued interest on the condensed consolidated balance sheet. The $10,000 conditional resolution discount and the previously suspended default interest have not been recognized, as such amounts are contingent upon a Springing Default. The amended principal balance of $165,000 reflects total consideration of $230,000 under the LaunchIT Agreement, less $65,000 of payments made to LaunchIT through the amendment effective date. Under the amended payment schedule, the Company is scheduled to make six monthly installments of $5,000 each from June 2026 through November 2026 and a final payment of $162,500 on or before December 31, 2026, for total scheduled payments of $192,500. The $27,500 difference between total scheduled payments and the $165,000 amended principal balance consists of $12,500 of accrued late fees recognized within accrued interest as described above and $15,000 of additional charges provided for under the amendment that are contingent and have not been recognized as of June 30, 2026. The $12,500 of accrued late fees represents fixed contractual penalty charges triggered by missed installment payments and does not represent time-based or percentage-rate interest within the meaning of ASC 835-30. The Company presents these late fees within the “accrued interest” caption on the balance sheet and within interest expense on the statement of operations, and excludes them from the computation of the effective interest rate on the LaunchIT Note.
The LaunchIT promissory note matures no later than December 31, 2026 and the convertible promissory note – related party matures on March 16, 2027; both are classified as current liabilities at June 30, 2026 because the amounts are due, or may be drawn upon and demanded, within twelve months of the balance-sheet date. Accrued late fees of $12,500 on the LaunchIT promissory note are excluded from the table above and are presented within accrued interest.
Interest on Outstanding Legal Service Obligation
Included in accounts payable and accrued interest at June 30, 2026 is an obligation to a legal service provider with an outstanding principal balance of approximately $1,045,249 and accrued interest of approximately $2,728,858. Under the terms of the arrangement, interest accrues at 1% per month (12% per annum), compounding on the outstanding balance. Interest expense on this obligation was approximately $219,899 for the six months ended June 30, 2026 and represents substantially all of the Company’s interest expense for the period. The remaining interest expense for the six months ended June 30, 2026 comprises $11,656 on the convertible promissory note – related party and $12,500 of fixed late fees on the LaunchIT promissory note. |