Convertible Notes Payable |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Convertible Notes Payable [Abstract] | |
| CONVERTIBLE NOTES PAYABLE | NOTE 7—CONVERTIBLE NOTES PAYABLE
Convertible Promissory Notes – Private Placement
On February 19, 2026, all principal and accrued interest in the aggregate amount of $73,857 due under the convertible promissory notes issued in January 2025 was converted into an aggregate of 14,151 shares of common stock. In connection with the conversion, the Company derecognized the related derivative liability of $87,878 associated with the conversion feature to additional paid-in capital, and recognized a loss of $70,378 on the change in fair value of the derivative liability and a gain on extinguishment of debt of $10,198, included in interest expense in the statement of operations prior to conversion.
Convertible Promissory Notes – Equity Crowdfunding
On February 25, 2026, all principal and accrued interest in the aggregate amount of $760,955 due under the convertible promissory notes issued in connection with equity crowdfunding offerings in 2025 was converted into an aggregate of 91,535 shares of common stock. In connection with the conversion, the Company derecognized the related derivative liability of $283,759 associated with the conversion feature to additional paid-in capital, and recognized a loss of $105,444 on the change in fair value of the derivative liability and a loss on extinguishment of debt of $14,434 included in interest expense in the statement of operations prior to conversion.
Secured Convertible Promissory Notes
On November 17, 2025, the Company entered into a securities purchase agreement (the “Note Purchase Agreement”) with Streeterville Capital, LLC (“Streeterville”), pursuant to which the Company agreed to offer and sell to Streeterville, in a private placement transaction, secured convertible promissory notes in the aggregate principal amount of up to $570,000 and warrants to purchase a number of shares of common stock equal to $1,000,000 divided by the lower of (i) $8.00 and (ii) the Valuation based Bid Price or Compelling Evidence-based Bid Price, as submitted by the Company and accepted by The Nasdaq Stock Market (“Nasdaq”) in connection with the Company’s direct listing application with Nasdaq and calculated in accordance with Nasdaq Listing Rule IM-5505-1 (the “Nasdaq Price”). On February 19, 2026, the Company’s direct listing was completed with a Nasdaq Price of $11.42. The Notes automatically convert into the Company’s Series E Preferred Stock upon the effectiveness of the Company’s registration statement.
On November 17, 2025, the Company issued to Streeterville a secured convertible promissory note in the principal amount of $295,000 and a warrant to purchase 62,500 shares of common stock for a total purchase price of $250,000, which, in addition to the original issue discount described below, includes $20,000 to pay Streeterville’s fees.
On February 9, 2026, the Company issued to Streeterville a secured convertible promissory note in the principal amount of $275,000 and a warrant to purchase 62,500 shares of common stock for a total purchase price of $250,000.
These notes carried an original issue discount of $25,000 and accrued interest at a rate of eight percent (8%) per annum with the principal amount and all accrued interest being due and payable six months (6) after issuance.
On April 10, 2026, all principal of $570,000 and accrued interest of $13,197 due under these notes was exchanged for 583 shares of series E convertible preferred stock in accordance with the terms of the notes. Immediately prior to conversion, the notes had a net carrying value of $339,560, after giving effect to an unamortized debt discount of $243,637 which was expensed to interest expense. The Company derecognized the carrying amount of the notes and the related accrued interest and recorded the issuance of the series E convertible preferred stock.
The Company recorded detachable warrants as a derivative liability of $347,865, with $235,000 recognized as a debt discount and the fair value exceeded the carrying value resulting in a day-one loss of $119,361. The Company recognized a day-one loss of $186,838 related to the embedded conversion feature, which was determined to meet the criteria for derivative classification and was accounted for as a derivative liability. In aggregate, the Company recognized a total day-one loss of $322,359 which was recognized in the statement of operations. Upon the effectiveness of the Company’s direct listing, the related derivative liabilities were remeasured to fair value and reclassified to additional paid-in capital within stockholders’ equity as the instruments no longer met derivative liability classification criteria.
The warrants may be exercised at any time on or after February 19, 2026 and until February 28, 2027 at an initial exercise price of $8.00, which was decreased to $2.25 (subject to standard adjustments for stock splits, stock dividends, recapitalizations and similar transactions) pursuant to a global amendment entered into between the parties on April 23, 2026 (the “Global Amendment”)(see Note 10).
In connection with the issuance of the note on November 17, 2025, the Company issued a placement agent warrant to Maxim Partners LLC (“Maxim”) to purchase 2,169 shares of common stock at an exercise price of $8.16 per share (subject to standard adjustments for stock splits, stock dividends, recapitalizations and similar transactions), and in connection with the issuance of the note on February 9, 2026, the Company issued a placement agent warrant to Maxim to purchase 2,022 shares of common stock at an exercise price of $8.16 per share (subject to standard adjustments for stock splits, stock dividends, recapitalizations and similar transactions). The warrants have a term of five years and were issued as compensation for placement agent services. The placement agent warrants were evaluated separately and determined to be equity-classified instruments, and accordingly, the Company recognized a day-one loss of $16,160, with the fair value recorded in additional paid-in capital as a cost of the financing. In addition, the Company recorded a cash placement fee of $15,000, representing 6% of the proceeds of the offering, which was recorded as a debt discount. |