v3.26.1
Convertible Debt Under ELOC Agreements
 6 Months Ended
Jun. 30, 2026
Convertible Debt Under ELOC Agreements [Abstract]  
Convertible debt under ELOC Agreements
14.Convertible debt under ELOC Agreements

 

On September 23, 2025, the Company entered into a securities purchase agreement, establishing an equity line of credit of up to $20,000,000 through one or more secured pre-paid purchases of the Company’s common stock (the “First ELOC Agreement”). Under the First ELOC Agreement, the Company may, from time to time, sell and issue common stock to the investor pursuant to individual pre-paid purchases, subject to the terms and conditions of the First ELOC Agreement. Principal amounts received under the First ELOC Agreement bear interest at 8.5% per annum and have a term of 3 years from the draw dates. Principal and accrued interest is convertible at any time during the three-year term at the option of the investor, in whole or in part, at a price that equals 88% of the lowest VWAP during the 10 trading days preceding the applicable measurement date. If that calculated price is below the applicable floor price per share, the investor may elect to have the applicable purchase amount settled in cash rather than in shares.

 

On April 16, 2026, the Company entered into a second securities purchase agreement, establishing a further equity line of credit with an aggregate commitment amount of up to $40,000,000 through one or more secured pre-paid purchases of the Company’s common stock over a two-year commitment period (the “second ELOC Agreement”). Subsequent pre-paid purchases under the facility are subject to the terms and conditions of the agreement, including applicable original issue discount, interest, Nasdaq-related pricing floors and shareholder approval requirements. The agreement also provides the investor with participation rights in certain future debt or equity financings and is secured by subsidiary equity interests, with certain wholly owned subsidiaries providing full guaranties. At closing the Company also issued 262,467 registered shares of common stock to the investor for a purchase price of $1,000,000 (Note 16). Principal amounts received under the Second ELOC Agreement bear interest at 7.5% per annum and have a term of 15 months from the draw dates. Principal and accrued interest is convertible at any time during the term at the option of the investor, in whole or in part, at a price that equals 97% of the lowest VWAP during the 5 trading days preceding the applicable measurement date. If that calculated price is below the applicable floor price per share, the investor may elect to have the applicable purchase amount settled in cash rather than in shares.

 

The Company is accounting for the convertible debt host contracts under ASC 470-20, , Debt with Conversion and Other Options, at amortized cost and has determined that the conversion options meets the definition of an embedded derivative liability which is separately accounted for at fair value in accordance with ASC 815-15 Derivatives and Hedging — Embedded Derivatives (Note 15).

 

A continuity of the amortized cost of the convertible debt hosts contract are as follows:

 

   First ELOC Agreement   Second ELOC Agreement   Total 
Balance, January 1, 2026  $1,254,479   $
-
   $1,254,479 
Principal   16,890,768    10,730,000    27,620,768 
Fair value of embedded derivative liability   (3,392,520)   (331,856)   (3,724,376)
Allocation of original issue discount and issuance cost (1)   (2,235,109)   (1,835,546)   (4,070,655)
Accretion   335,797    280,496    616,293 
Interest expense   268,297    145,322    413,619 
Repayment through common stock   (10,632,356)   (2,402,289)   (13,034,645)
Balance, June 30, 2026  $2,489,356   $6,586,127   $9,075,483 

 

(1) Total original issuance discounts and issuance costs amounted to $4,070,655, of which $3,450,152 were allocated to the amortized cost of the convertible debt and $620,503 were allocated to the derivative liabilities and recorded as finance cost in the statement of operations.