NOTE 10. DEBT

Extinguishment of Junior and Senior Notes Issued in 2023 and 2024

During the three and six months ended June 30, 2025, the Company issued nil and 2,252,074 shares of Common Stock to noteholders to extinguish principal and accrued interest under the Junior and Senior Notes. The reacquisition value of the debt was higher than the related carrying value, and thus resulted in an aggregate net loss on extinguishment of debt of $1,691,520 recorded in the condensed consolidated statement of operations and comprehensive for the six months ended June 30, 2025.

Foreclosure Collateral Sale

On March 5, 2025, as part of the foreclosure process initiated by the lead investor (the “Foreclosure”), the lenders holding the outstanding Senior Convertible Notes (the senior secured convertible notes issued by the Company in 2023 and 2024) held an auction for the sale of collateral securing the Company’s repayment obligations, which resulted in such lenders taking possession of such collateral in exchange for a full discharge and extinguishment of the Company’s $8,961,872 of indebtedness with respect to the Junior Notes and Senior Convertible Notes, as well as a loss on extinguishment of the Senior Convertible Notes of $1,682,641, of which $27,139 of this loss relates to related parties. The extinguishment of the Junior Notes did not result in a gain or loss on extinguishment as the proceeds deemed to be received by the holders of the Junior Notes in connection with the Foreclosure approximated the carrying value of the Junior Notes and all issuance costs were fully amortized. The loss on extinguishment of the Senior Convertible Notes is included within loss on extinguishment of debt within the condensed consolidated statement of operations and comprehensive loss for the six months ended June 30, 2025.

Liqueous Obligation

In October 2024, the Company and Liqueous agreed to terms where the Company borrowed $1,053,824 from Liqueous (the “Liqueous Obligation”). The Liqueous Obligation was subordinated to the Company's other outstanding debt instruments, accrued interest at 8% per annum and matured in October 2025. The Liqueous Obligation was prepayable at any time prior to the maturity date without penalty. Upon an event of default, the investor could require all outstanding and accrued interest immediately due and payable.

In February 2025, in connection with the Liqueous Settlement Agreement, as amended, the Company agreed to issue 1,283,813 pre-funded warrants exercisable into Common Stock, which included a nominal exercise price, to extinguish the Liqueous Obligation. In April 2025, through an additional amendment to the Liqueous Settlement Agreement, the Company agreed to settle the Liqueous Obligation through the issuance of 1,821,836 shares of Common Stock. As the Common Stock was not yet issued as of June 30, 2025, the Company continued to remain legally obligated under the terms of the Liqueous Obligation on that date.

TAG Promissory Note (Related Party)

In January 2025, the Company issued a promissory note in a principal amount of $545,000 (the "TAG Promissory Note") to TAG, which is founded and owned by the Company's Executive Chairman and Co-Chief Executive Officer, as a replacement of a previously recorded shareholder advance. The TAG Promissory Note was subordinated to the Company's other outstanding debt instruments at the time of issuance, accrued interest beginning October 28, 2025 at SOFR plus a margin of 10% per annum and matured in January 2026.

In July 2025, following stockholder approval, the TAG Promissory Note was amended to permit TAG to convert any outstanding principal and unpaid accrued interest due under the TAG Promissory Note into shares of Common Stock at a conversion price equal to a 33.33% discount to the lowest daily volume weighted average price as reported by Bloomberg L.P. (“VWAP") during the 5 days prior to the conversion date. Certain conversion features of the TAG Promissory Note would typically be considered derivatives that would require bifurcation. The TAG Promissory Note is recorded at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations and comprehensive loss. As the addition of the conversion feature resulted in debt that was considered substantially different, the amendment resulted in a loss on debt extinguishment of $1,094,914 included in the condensed consolidated statement of operations and comprehensive loss in the third quarter of 2025.

In December 2025, TAG transferred its interest in the TAG Promissory Note to Vanguard, a newly-formed Italian limited liability company wholly owned by the Company’s Executive Chairman and Co-Chief Executive Officer and Vanguard then converted the TAG Promissory Note into shares of Common Stock.

AZ Promissory Note (Related Party)

In connection with a previous unsuccessful acquisition, the Company retained $900,000 of the purchase price owed to its Executive Chairman and Co-Chief Executive Officer through a related-party promissory note in a principal amount of $900,000 (the "AZ Promissory Note"). The $900,000 retained by the Company was used as a portion of the non-cash consideration related to the Advance Payment of the Orbit Transaction, each as defined and described in Note 4. The AZ Promissory Note was subordinated to the Company's current and future outstanding secured debt instruments issued by an institutional lender and the Series A Preferred Stock, accrued interest beginning July 30, 2025 at 10% per annum, was payable monthly after that date, and matured on April 2026.

In July 2025, following stockholder approval, the AZ Promissory Note was amended to permit Mr. Zamboni to convert any outstanding principal and unpaid accrued interest due under the AZ Promissory Note into shares of Common Stock at a conversion price equal to a 33.33% discount to the lowest daily VWAP during the 5 days prior to the conversion date. Certain conversion features of the AZ Promissory Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the AZ Promissory Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations and comprehensive loss. As the addition of the conversion feature resulted in debt that was considered substantially different, the amendment resulted in a loss on debt extinguishment of $1,745,201 included in the condensed consolidated statement of operations and comprehensive loss in the third quarter of 2025.

In October 2025, Mr. Zamboni transferred his interest in the AZ Promissory Note to Vanguard. In December 2025, Vanguard converted the AZ Promissory Note into shares of Common Stock.

2025 Indigo Capital Convertible Notes

In March, April, July and August 2025, the Company issued multiple unsecured convertible notes to Indigo Capital LP ("Indigo Capital"), including the “2025 March Indigo Capital Convertible Notes”, the “2025 April Indigo Capital Convertible Notes”, the "2025 July Indigo Capital Convertible Note" and the “2025 August Indigo Capital Convertible Note” collectively the “2025 Indigo Capital Convertible Notes”, in connection with both new capital infusions and the exchange of previously outstanding indebtedness.

The 2025 Indigo Capital Convertible Notes generally bear no interest unless an event of default has occurred, at which time interest accrues at 15.0% per annum, have contractual maturity dates ranging from March 2026 through August 2026, and are convertible into shares of Common Stock at variable conversion prices, generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentages ranging from approximately 33% to 100% of the applicable VWAP.

Issuances of shares upon conversion were initially subject to a 19.99% exchange cap, which was subsequently approved for removal by the Company’s stockholders at the 2025 annual meeting. The notes contain customary terms and conditions, including events of default, and certain of the notes are subordinated to the Company’s Series A Preferred Stock with respect to liquidation and dividend rights.

Certain conversion features of the 2025 Indigo Capital Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Indigo Capital Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statement of operations and comprehensive loss.

During the three and six months ended June 30, 2025, the Company recorded a loss on issuance of debt of $181,351 and $889,151, respectively, representing the excess of the initial fair value of the 2025 March Indigo Capital Convertible Notes and 2025 April Indigo Capital Convertible Notes over the proceeds received and a loss on debt extinguishment of $163,500 and $2,286,903, respectively, representing the excess of the initial fair value of the 2025 March Indigo Capital Convertible Notes and 2025 April Indigo Capital Convertible Notes over the carrying amount of the previously outstanding indebtedness that was extinguished. During the three and six months ended June 30, 2025, debt issuance costs related to the 2025 Indigo Capital Convertible Notes of $40,000 and $60,000, respectively, were expensed as incurred and included within other income (loss), net on the condensed consolidated statements of operations and comprehensive loss.

Conversions

During the three months ended June 30, 2026 and 2025, Indigo Capital converted $12,516 and $917,803, respectively, of contractual principal and accrued interest, as applicable, under the 2025 Indigo Capital Convertible Notes, resulting in the issuance of 97,962 and 1,902,690, respectively, of shares of Common Stock to Indigo and a reduction in the fair value of the 2025 Indigo Capital Convertible Notes, with a corresponding increase to additional paid-in capital of $17,241 and $2,761,362, respectively.

During the six months ended June 30, 2026 and 2025, Indigo Capital converted $42,797 and $1,225,123, respectively, of contractual principal and accrued interest, as applicable, under the 2025 Indigo Capital Convertible Notes, resulting in the issuance of 141,233 and 2,767,073, respectively, of shares of Common Stock to Indigo and a reduction in the fair value of the 2025 Indigo Capital Convertible Notes, with a corresponding increase to additional paid-in capital of $55,134 and $3,668,940, respectively.

Principal

At June 30, 2026, the 2025 Indigo Capital Convertible Notes were no longer outstanding. For additional information regarding the fair value of the 2025 Indigo Capital Convertible Notes, see Note 7.

Agile Note

In May 2025, the Company entered into a Business Loan and Security Agreement with Agile Capital Funding, LLC and its affiliates (“Agile”), pursuant to which the Company issued to Agile a $525,000 face amount secured promissory note (the “Agile Note”). The Agile Note bore interest at 44.0%, and required weekly repayments of $27,000 through November 2025, totaling $756,000.

Certain features of the Agile Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the Agile Note at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.

The Company received net proceeds of $443,620 from the issuance of the Agile Note, which included (i) a debt discount of $25,000 and (ii) debt issuance costs of $56,380, which are included in other income (loss), net on the condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2025.

On May 30, 2025, the Company executed an amendment to the Business Loan and Security Agreement with Agile, which amended (i) the principal amount of the Agile Note to $1,000,000, (ii) the weekly payments from $27,000 to $48,000 and (iii) the maturity date to December 26, 2025. In connection with the amendment, the Company received net proceeds of $248,000, which comprises (a) the new principal of $1,000,000, less (b) the aggregate principal and prepayment premium owed under the original agreement of $702,000 and (c) $50,000 of debt discount.

Principal

At June 30, 2026, the Agile Note was no longer outstanding. For additional information regarding the fair value of the Agile Note, see Note 7.

2025 Diagonal Convertible Notes

In May and July 2025, the Company issued unsecured convertible promissory notes to 1800 Diagonal Lending LLC (“Diagonal”), including the “2025 Diagonal Convertible Note” issued in May and the “2025 July Diagonal Convertible Note”, collectively the “2025 Diagonal Convertible Notes”, in connection with capital infusions.

The 2025 Diagonal Convertible Notes bear interest at 10.0% per annum, which increases upon an event of default, and have contractual maturity dates ranging from February 2026 through April 2026. The 2025 Diagonal Convertible Notes are convertible into shares of Common Stock beginning 180 days after issuance at conversion prices generally equal to a 25% discount to the lowest trading price of the Common Stock during a specified period prior to conversion. The 2025 Diagonal Convertible Notes are subordinate to the Company’s Series A Preferred Stock with respect to dividend and liquidation rights and contain customary terms and conditions, including events of default.

Certain conversion features of the 2025 Diagonal Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Diagonal Convertible Notes at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $399,955 of the 2025 Diagonal Convertible Note over the proceeds received was recorded as a loss on issuance of debt on the condensed consolidated statements of operations and comprehensive loss of $192,955 during the three and six months ended June 30, 2025.

The Company received net proceeds of $178,000 from the issuance of the 2025 Diagonal Convertible Note, which included (i) a debt discount of $20,700 and (ii) debt issuance costs of $29,000, which are included in other income (loss), net on the condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2025.

Conversions

During the six months ended June 30, 2026, Diagonal converted the entire remaining $182,835 of contractual principal and accrued interest, as applicable, under the 2025 Diagonal Convertible Notes, resulting in the issuance of 281,455 shares of Common Stock to Diagonal and a reduction in the fair value of the 2025 Diagonal Convertible Notes, with a corresponding increase to additional paid-in capital of $250,755.

Principal

At June 30, 2026, the 2025 Diagonal Convertible Notes were no longer outstanding. Refer to Note 7 for additional information regarding the fair value of the 2025 Diagonal Convertible Notes.

2025 Boot Convertible Note

In May 2025, the Company entered into a Securities Purchase Agreement with Boot Capital LLC (“Boot”), pursuant to which the Company issued to Boot a $110,000 face amount convertible promissory note (the “2025 Boot Convertible Note”). The 2025 Boot Convertible Note bore interest at 10% and had a maturity date of February 28, 2026.

Certain conversion features of the 2025 Boot Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Boot Convertible Note at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $193,215 of the 2025 Boot Convertible Note over the proceeds received was recorded as a loss on issuance of debt on the condensed consolidated statements of operations and comprehensive loss of $93,215 during the three and six months ended June 30, 2025.

The Company received net proceeds of $84,000 from the issuance of the 2025 Boot Convertible Note, which included (i) a debt discount of $10,000 and (ii) debt issuance costs of $16,000, which are included in other income (loss), net on the condensed consolidated statements of operations and comprehensive loss during the three and six months ended June 30, 2025.

Principal

At June 30, 2026, the 2025 Boot Convertible Note was no longer outstanding. For additional information regarding the fair value of the 2025 Boot Convertible Note, see Note 7.

2025 Brick Lane Convertible Notes

In June and September 2025, the Company issued unsecured convertible notes to Brick Lane Capital Management Limited ("Brick Lane"), including the “2025 June Brick Lane Convertible Notes” and the “2025 September Brick Lane Convertible Note”, collectively the “2025 Brick Lane Convertible Notes”, in connection with both capital infusions and the exchange of previously outstanding Preferred Stock.

The 2025 Brick Lane Convertible Notes generally bear no interest unless an event of default has occurred, at which time interest accrues at 15.0% per annum, have contractual maturity dates ranging from April 2026 through September 2026, and are convertible into shares of Common Stock at variable conversion prices, generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentages ranging from approximately 70% to 100% of the applicable VWAP.

Certain conversion features of the 2025 Brick Lane Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Brick Lane Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.

Issuances of shares upon conversion were initially subject to a 19.99% exchange cap and beneficial ownership limitations, and the notes are subordinated to the Company’s Series A Preferred Stock with respect to dividend and liquidation rights. The notes contain customary terms and conditions, including events of default, and the Company is obligated to register the shares issuable upon conversion.

During the three and six months ended June 30, 2025, the Company recorded a loss on debt extinguishment of $1,071,997 related to the issuance of the 2025 June Brick Lane Convertible Notes to extinguish the 100,000 shares of the Company's outstanding Series A Preferred Stock, which represents the excess of the fair value of the 2025 June Brick Lane Convertible Notes over the carrying amount of the Series A Preferred Stock included in preferred stock liability on the consolidated balance sheet. Additionally, during the three and six months ended June 30, 2025, the Company recorded a loss on issuance of debt of $243,387 related to the 2025 June Brick Lane Convertible Notes, representing the excess of the initial fair value of $493,387 of the capital-infusion note over the $250,000 of proceeds received.

Conversions

During the three months ended June 30, 2026 and 2025, Brick Lane converted $125,000 and $1,050,000, respectively, of contractual principal and accrued interest, as applicable, under the 2025 Brick Lane Convertible Notes, resulting in the issuance of 1,118,168 and 1,362,829, respectively, of shares of Common Stock to Brick Lane and a reduction in the fair value of the 2025 Brick Lane Convertible Notes, with a corresponding increase to additional paid-in capital of $196,798 and $2,264,573, respectively.

During the six months ended June 30, 2026 and 2025, Brick Lane converted $146,734 and $1,050,000, respectively, of contractual principal and accrued interest, as applicable, under the 2025 Brick Lane Convertible Notes, resulting in the issuance of 1,145,356 and 1,362,829, respectively, of shares of Common Stock to Brick Lane and a reduction in the fair value of the 2025 Brick Lane Convertible Notes, with a corresponding increase to additional paid-in capital of $222,711 and $2,264,573, respectively.

Principal

At June 30, 2026, the 2025 Brick Lane Convertible Notes were no longer outstanding. Refer to Note 7 for additional information regarding the fair value of the 2025 Brick Lane Convertible Notes.

2025 Bomore Convertible Notes

In June 2025, the Company issued unsecured convertible notes to Bomore Opportunity Group Ltd ("Bomore"), the “2025 Bomore Convertible Notes”, in connection with both capital infusions and the exchange of previously outstanding Preferred Stock.

The 2025 Bomore Convertible Notes generally bore no interest, had contractual maturity dates in June 2026, and were convertible into shares of Common Stock at variable conversion prices, generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentages equal to 100% of the applicable VWAP.

Certain conversion features of the 2025 Bomore Convertible Notes would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Bomore Convertible Notes at fair value, and the changes in the fair value are recorded within the condensed consolidated statements of operations and comprehensive loss.

During the three and six months ended June 30, 2025, the Company recorded a loss on debt extinguishment of $140,323 related to the issuance of the 2025 Bomore Convertible Notes to extinguish the 100,000 shares of the Company's outstanding Series A Preferred Stock, which represents the excess of the fair value of the 2025 Bomore Convertible Notes over the carrying amount of the Series A Preferred Stock included in preferred stock liability on the consolidated balance sheet.

Conversions

During the three months ended June 30, 2026 and 2025, Bomore converted nil and $1,050,000 of contractual principal and accrued interest, as applicable, under the 2025 Bomore Convertible Notes, resulting in the required issuance of nil and 652,063, respectively, of shares of Common Stock to Bomore, which were issued during the third quarter of 2025.

During the six months ended June 30, 2026 and 2025, Bomore converted $50,469 (the entire remaining balance) and $1,050,000, respectively, of contractual principal and accrued interest, as applicable, under the 2025 Bomore Convertible Notes, resulting in the required issuance of

63,133 and 652,063, respectively, of shares of Common Stock to Bomore and a reduction in the fair value of the 2025 Bomore Convertible Notes, with a corresponding increase to additional paid-in capital of $60,172 during the six months ended June 30, 2026. The shares related to the conversion during the three months ended June 30, 2025 were issued during the third quarter of 2025.

Principal

At June 30, 2026, the 2025 Bomore Convertible Notes were no longer outstanding. For additional information regarding the fair value of the 2025 Bomore Convertible Notes, see Note 7.

2025 Torcross Convertible Note

In June 2025, the Company entered into transactions with Torcross Capital LLC ("Torcross"), including the “2025 Torcross Convertible Note”. In connection with such transactions, the Company also initially entered into an exchange arrangement involving Series A Preferred Stock; however, this arrangement was rescinded in November 2025, and as a result, the related exchange convertible note was deemed not to have been issued.

The 2025 Torcross Convertible Note generally bore no interest, had a contractual maturity date in June 2026, and was convertible into shares of Common Stock at a variable conversion price generally based on a percentage of the lowest VWAP over a specified period prior to conversion, with such percentage equal to approximately 80% of the applicable VWAP.

Certain conversion features of the 2025 Torcross Convertible Note would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the 2025 Torcross Convertible Note at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $133,883 of the 2025 Torcross Convertible Note over the proceeds received was recorded as a loss on issuance of debt on the condensed consolidated statements of operations and comprehensive loss of $33,883 during the three and six months ended June 30, 2025.

Conversions

During the six months ended June 30, 2026, Torcross converted the entire remaining $20,187 of contractual principal and accrued interest, as applicable, under the 2025 Torcross Convertible Note, resulting in the issuance of 31,567 of shares of Common Stock to Torcross and a reduction in the fair value of the 2025 Torcross Convertible Note, with a corresponding increase to additional paid-in capital of $30,086.

Principal

At June 30, 2026, the 2025 Torcross Convertible Note was no longer outstanding. For additional information regarding the fair value of the 2025 Torcross Convertible Note, see Note 7.

2025 YA Debentures

In June and December 2025, the Company entered into financing arrangements with YA II PN, Ltd. (“YA”), including a debenture in the amount of $1,250,000, which closed in July 2025, the “2025 June YA Debenture”, and a debenture with an aggregate principal amount of $25,000,000, the “December 2025 YA Debenture”, collectively the “2025 YA Debentures”. The 2025 June YA Debenture bore interest at 8.0% per annum and matured in October 2025. The Company was required to use proceeds from its SEPA to repay amounts outstanding under this debenture, which was fully repaid during 2025. The December 2025 YA Debenture was issued at an original issue discount of 7.0%, resulting in gross cash proceeds to the Company of $23,250,000. Additionally, the December 2025 YA Debenture was issued with the December 2025 YA Warrants, as defined and further described in Note 12. The December 2025 YA Debenture matured on December 16, 2026, subject to extension at the option of the holder, and bore interest at a rate of 8.0% per annum on the outstanding principal balance, which upon the occurrence of an event of default, would increase to 18.0% per annum.

Beginning on March 18, 2026, and continuing on the same day of each successive month, the Company was required to make monthly installment payments of principal in the amount of $2,777,778, plus accrued and unpaid interest. In addition, unless otherwise agreed by the parties, all proceeds received by the Company under its SEPA, as defined and further described in Note 13, were required to be applied to the repayment of the December 2025 YA Debenture until it was paid in full.

The Company could, at its option, redeem all or a portion of the outstanding principal at any time for cash at an amount equal to the principal being redeemed plus accrued and unpaid interest through the redemption date. No prepayment penalty or make-whole premium applied. Upon acceleration following an event of default, all unpaid principal, accrued interest, and other amounts due under the December 2025 YA Debenture would become immediately due and payable. The December 2025 YA Debenture contained customary terms and conditions, including representations, warranties, and covenants. Subject to certain exceptions, while the December 2025 YA Debenture remained outstanding, the Company was restricted from entering into variable rate financing transactions without YA's prior written consent.

Certain features of the YA Debentures would typically be considered derivatives that would require bifurcation. As such, the Company elected to account for the December 2025 YA Debenture at fair value, and the changes in the fair value are recorded within the consolidated statement of operations. The excess of the initial fair value of $1,255,700 of the 2025 June YA Debenture over the proceeds received was recorded as a loss on issuance of debt on the condensed consolidated statement of operations and comprehensive loss of $155,700 during the third quarter of 2025. Additionally, as the $25,312,500 fair value of the December 2025 YA Debenture at inception was greater than the net proceeds received for the issuance of the December 2025 YA Debenture and the December 2025 YA Warrants, the Company recorded a $2,062,500 loss on issuance of debt in the fourth quarter of 2025 for the excess of the fair value of the December 2025 YA Debenture over the net proceeds received. Accordingly, no value was ascribed to the December 2025 YA Warrants.

The Company incurred debt issuance costs of $127,000 related to the issuance of the 2025 June YA Debenture, which is included within other income (loss), net on the consolidated statements of operations for the three and six months ended June 30, 2025. Issuance costs of $1,395,166

were incurred in connection with the December 2025 YA Debenture and December 2025 YA Warrants, which were allocated entirely to the December 2025 YA Debenture in the same manner as the proceeds, and are included in other income (loss), net on the condensed consolidated statements of operations and comprehensive loss during the fourth quarter of 2025.

During the three and six months ended June 30, 2026, the Company used proceeds under the SEPA, as well as existing cash, to repay $10,401,233 of principal and accrued interest under the December 2025 YA Debenture. During the third quarter of 2025, the Company used proceeds from the SEPA to pay all outstanding principal and interest under the 2025 June YA Debenture.

Principal

As of June 30, 2026, principal outstanding under the December 2025 YA Debenture was $15,466,230. For additional information regarding the fair value of the 2025 December YA Debenture, see Note 7. On July 17, 2026, the Company repaid the December 2025 YA Debenture in full with proceeds from the July 2026 Public Offering, as defined and described in Note 18. For additional information regarding the repayment of the December 2025 YA Debenture, see Note 18.

2026 Brick Lane H&K Investment Note

As further described in Note 4, in connection with the H&K Investment, the Company issued the 2026 Brick Lane H&K Investment Note in a principal amount of $15,000,000. The 2026 Brick Lane H&K Investment Note bears no interest except in the event of a default, has a March 19, 2027 maturity date, and is convertible for $0.756 per share, which was the closing VWAP on the day prior to the execution date of the H&K Investment Agreement, adjusted for the February 2026 Reverse Stock Split. Conversion of the 2026 Brick Lane H&K Investment Note is limited in the event stockholder approval of an increase in authorized shares is required, or when conversion would result in Brick Lane and its affiliates beneficially owning more than 9.9% of the Company's then outstanding shares of Common Stock. The 2026 Brick Lane H&K Investment Note is subordinate to (i) the currently outstanding Series A Preferred Stock, solely with respect to dividend rights and rights on the distribution of assets on any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company, and (ii) the December 2025 YA Debenture. The Company is also required to file a registration statement for the resale of shares of Common Stock issuable upon conversion of the 2026 Brick Lane H&K Investment Note.

The Company elected the fair value option for the 2026 Brick Lane H&K Investment Note, whereby the 2026 Brick Lane H&K Investment Note was recorded at fair value at issuance of $23,350,000, with the excess over the fair value of the H&K Investment recorded as a loss on issuance of debt on the condensed consolidated statement of operations and comprehensive loss of $11,661,274 during the three months ended March 31, 2026. The note is subsequently remeasured at fair value each reporting period, with changes in the fair value recorded within the condensed consolidated statement of operations and comprehensive loss. For additional information regarding the fair value of the 2026 Brick Lane H&K Investment Note, see Note 7.

Principal

As of June 30, 2026, the outstanding principal amount under the 2026 Brick Lane H&K Investment Note was $15,000,000.

Lyocon Convertible Notes

On January 15, 2026, the Company consummated the Lyocon Acquisition, as further described in Note 4. Consideration transferred included two subordinated convertible notes (the “Lyocon Convertible Notes”) in the principal amount of $625,000 to each of the two sellers, which bore no interest, except in the event of a default, and matured on March 19, 2027. At maturity, the holder of a Lyocon Convertible Note could elect to convert all or a portion of the outstanding principal amount and accrued interest into shares of the Company’s Common Stock, at a conversion price of $1.47. At maturity, the holder of a Lyocon Convertible Note had the right to request the Company to satisfy all or a portion of the outstanding principal and accrued interest under such Lyocon Convertible Note in cash. The Company could elect to pay all or a portion of the outstanding principal amount and accrued interest under a Lyocon Convertible Note in cash in lieu of shares of Common Stock in the event the VWAP of the Common Stock during the 60 trading days immediately preceding the Lyocon Convertible Note Maturity Date was at least 30% higher than the conversion price.

In connection with the Lyocon Acquisition, the aggregate acquisition-date fair value of the Lyocon Convertible Notes was determined to be $1,422,000, exceeding the aggregate face amount of $1,250,000 by $172,000, which represented a substantial premium attributable to the embedded conversion feature and was recorded within additional paid-in capital on the condensed consolidated balance sheet as of March 31, 2026. As of June 30, 2026, the effective rate on the Lyocon Convertible Notes was nil.

Principal

As of June 30, 2026, the aggregate principal amount outstanding under the Lyocon Convertible Notes was $1,250,000. On July 17, 2026, the Company repaid the Lyocon Convertible Notes in full with proceeds from the July 2026 Public Offering, as defined and described in Note 18. For additional information regarding the repayment of the Lyocon Convertible Notes, see Note 18.

Maturities of Debt