DERIVATIVE LIABILITIES

6 Months Ended

Jun. 30, 2026

NOTE 11 – DERIVATIVE LIABILITIES

The fair values of the conversion option of outstanding convertible notes payable and common stock warrants were determined to be derivative liabilities under ASC 815 due to the default on convertible notes payable disclosed above, which resulted in a variable conversion price on the outstanding convertible note payable. The fair value of the derivative liabilities was estimated using a Monte-Carlo model with the following assumptions:

	June 30, 2026			December 31, 2025
Volatility		105	%		90	%
Dividend Yield		0	%		0	%
Risk-free rate		3.96	%		3.41	%
Expected term	1.38 years			1.29 years
Stock price	$	14.50		$	0.68
Conversion price	$	8.80		$	49.2
Derivative liability fair value	$	5,633,342		$	3,463,727
Number of shares issued upon conversion, exercise, or satisfaction of required conditions		530,240			221,076

All fair value measurements related to the derivative liabilities are considered significant unobservable inputs (Level 3) under the fair value hierarchy of ASC 820.

The table below presents the change in the fair value of the derivative liability during the six months ended June 30, 2026:

Fair value as of December 31, 2025	$	3,463,727
Derivative value for liquidated damages added to principal balance of notes		242,745
Settlement of derivative upon conversion		(1,092,739	)
Change in fair value of derivatives		3,019,609
Fair value as of June 30, 2026	$	5,633,342

The total impact of derivative liabilities recognized in the Company’s consolidated statements of operations includes the change in fair value of derivatives, with the Company recognizing a total loss of $3,019,609 during the six months ended June 30, 2026.