Derivative Valuation |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Valuation | Note 8 — Derivative Valuation
Convertible Note
In November 2023, the Company issued a convertible note (see Note 7). The conversion terms of the convertible note are based on certain factors, such as the future price of the Company’s common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the exercise terms of the conversion feature becoming available on November 28, 2025, the conversion features in the note met the definition of a derivative and required bifurcation and liability classification at fair value. As of December 31, 2025, the derivative liability was $507,733. During the six months ended June 30, 2026, there was a decrease of the derivative liability to $374,650 which represented a change in the fair value of the derivative of $133,083. The Company estimates the fair value of the embedded conversion feature using a Monte Carlo simulation.
During the six months ended June 30, 2026, the Company had the following activity in the derivative liability account for the convertible debt:
A summary of quantitative information with respect to valuation methodology and significant unobservable income used for the Company’s derivative liability that are categorized within Level 3 of fair value hierarchy for the six months ended June 30, 2026 is as follows:
Warrants
During the six months ended June 30, 2026, the Company issued 55,166,667 warrants to shareholders of the Company’s Series B Preferred Shares. The warrant holder is entitled to subscribe for and purchase shares of common stock based on the market value of the shares of common stock at time of exercise. The exercise terms of the conversion feature met the definition of a derivative and required bifurcation and liability classification at fair value. The Company estimates the fair value of the conversion feature using the Black Scholes Model.
During the six months ended June 30, 2026, the Company had the following activity in the derivative liability account for the warrants:
A summary of quantitative information with respect to valuation methodology and significant unobservable income used for the Company’s derivative liability that are categorized within Level 3 of fair value hierarchy for the six months ended June 30, 2026 is as follows:
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