v3.26.1
DERIVATIVE LIABILITIES
 6 Months Ended
Jun. 30, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE LIABILITIES

NOTE 10 — DERIVATIVE LIABILITIES

 

As discussed in Note 9—Convertible Debentures, we have entered into five separate agreements to borrow a total of $2,665,528 with the outstanding principal and interest being convertible at the holder’s option into common stock of the company at the lesser of $100 (notes one through four) or $0.10 (note five) or the lowest closing bid price in the prior 20 trading days. Embedded derivatives are valued separately from the host instrument and are recognized as derivative liabilities in our balance sheet. We measure these instruments at their estimated fair value and recognize changes in their estimated fair value in results of operations during the period of change. We have estimated the fair value of these embedded derivatives for convertible debentures and associated warrants using a Monte Carlo simulation as of June 30, 2026 and December 31, 2025, using the following assumptions:

 

   June 30, 2026   December 31, 2025 
Volatility   114.1%   108.7% - 117.2%
Risk-free rates   3.96%   3.53% - 3.59%
Stock price   0.0212   $0.043 
Remaining life   0.83 years    0.25- 1.33 years 

 

A summary of the activity of the derivative liability for these notes is as follows:

 

      
Balance at December 31, 2024  $2,458,435 
Derivative gain due to mark to market adjustment   (64,891)
Balance at December 31, 2025   2,393,544 
Derivative gain due to mark to market adjustment   (63,025)
Balance at June 30, 2026  $2,330,519 

 

The fair values of the derivative instruments are measured each quarter, which resulted in a gain of $63,025 and $4,384 during the six months ended June 30, 2026 and 2025, respectively. As of June 30, 2026 and December 31, 2025, the fair market value of the derivatives aggregated $2,330,519 and $2,393,544, respectively.