Loans Payable |
6 Months Ended |
|---|---|
Jun. 30, 2026 | |
| Debt Disclosure [Abstract] | |
| Loans Payable | NOTE 9. Loans Payable
Legacy Promissory Notes
In November 2023, the Company issued promissory notes with an aggregate principal amount of $550,000. The notes were originally due on the earlier of one year from issuance or 30 days following the closing of a planned registered security token offering. The notes carried an effective financing cost equal to 100% of the principal amount. Accordingly, the Company recognized aggregate interest expense of $550,000 over the original term of the notes.
In addition, the Company issued 550,000 warrants to purchase shares of its common stock to the holders of the promissory notes as additional consideration (see Note 10). The fair value of the warrants of $87,970 was recorded as a debt discount, with a corresponding increase to additional paid-in capital, at the date of issuance.
Effective November 1, 2024, the notes were amended to extend their maturity date to July 1, 2025. In connection with the amendment, the Company incurred an additional financing cost equal to 10% of the aggregate amount then due, or $110,000, which was recognized as a loss on debt modification during the year ended December 31, 2024. The Company also pledged 489 ION.au certificates as collateral for the notes. See Note 7. In addition, the obligation to issue registered tokens was assigned to a related party, and the Company was released from that obligation by the noteholders.
During the year ended December 31, 2025, the notes matured and remained unpaid, resulting in a default. The Company incurred an additional penalty equal to 10% of the outstanding balance, or $121,000, which was recognized as interest expense. As of December 31, 2025, the outstanding obligation totaled $1,331,000, consisting of principal of $550,000 and accrued interest of $781,000.
Settlement of Legacy Promissory Notes
During the six months ended June 30, 2026, the Company fully settled the outstanding promissory notes and related accrued interest totaling $1,331,000.
The Company satisfied the obligation through the transfer of 489.50 units of ION.au, which had an aggregate carrying value of $890,381 at the date of settlement. As a result, the Company recognized a gain on settlement of debt of $440,619, representing the difference between the carrying amount of the liability extinguished and the carrying amount of the assets transferred.
OnDeck Term Loan
In June 2026, the Company entered into a Business Loan and Security Agreement with ODK Capital, LLC, doing business as OnDeck, under which the Company borrowed $112,000. The lender deducted an origination fee of $2,800 from the loan proceeds, resulting in net cash proceeds to the Company of $109,200.
The loan requires 65 weekly payments of $2,745, beginning seven days after funding, and has a contractual repayment period of approximately 15 months. The aggregate contractual payments total $178,416, consisting of the original principal amount and contractual interest of $66,416. The agreement permits the Company to prepay the loan in full with a reduction of the unpaid contractual interest, subject to the terms of the agreement.
The loan is secured by a continuing security interest in substantially all of the Company’s tangible and intangible personal property, including cash, accounts, deposit accounts, equipment, investment property, software, and other general intangibles.
The Company recorded the loan at its gross principal amount of $112,000 and recorded the $2,800 origination fee as a debt discount. The debt discount is being amortized to interest expense over the contractual term of the loan using the effective interest method.
The Company made its first scheduled weekly payment during June 2026. During the six months ended June 30, 2026, the Company recognized interest expense related to the OnDeck loan of $2,113, including amortization of the debt discount.
As of June 30, 2026, the gross principal outstanding under the OnDeck loan was $110,988. The unamortized debt discount related to the loan was $2,733, resulting in a net carrying amount of $108,255. Of the net carrying amount, $81,366 was classified as current and $26,889 was classified as noncurrent in the accompanying condensed consolidated balance sheet. As of June 30, 2026, the Company had $245 of accrued interest related to this note.
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