Note 12 – Convertible notes

Conversion of convertible notes into common stock

On June 30, 2026, holders of the convertible notes exercised their conversion rights. Immediately prior to conversion, the Company accreted interest on the convertible notes through the conversion date and remeasured the related embedded derivative liabilities to fair value, with the resulting change in fair value recognized in the statement of operations.

Upon conversion, the Company derecognized the carrying amount of the convertible note liabilities, including accrued interest, and the related embedded derivative liabilities. The Company recorded the equity shares issued upon conversion at their fair value within stockholders’ equity, consisting of common stock at par value and additional paid-in capital for the excess amount. The difference between the aggregate carrying amount of the convertible note liabilities and embedded derivative liabilities derecognized and the fair value of the equity shares issued was recognized as a gain or loss on conversion of convertible notes in the statement of operations.

Following the conversions, no convertible notes or related embedded derivative liabilities remained outstanding as of June 30, 2026.

(a) Ocean Fund Holdings Pte. Ltd.

Fair valuation of embedded derivatives

The Company uses Monte Carlo simulation methodology for valuation of embedded derivatives. For the purpose of valuation, a simulation analysis was undertaken in which 10,000 scenario simulations were assessed for the Company’s equity value. The option payoff of the simulated equity value, minus the exercise value (i.e., outstanding principal + accrued interest), was considered as the holding value of the embedded derivative.

Based on the fully diluted capital structure of the Company and the valuation inputs/parameters mentioned below, the Company has arrived at the fair value of the embedded derivatives.

The assumptions used in the model were as follows:

Notes to valuation:

Following the execution of the Merger Agreement, the Company updated the valuation methodology used to measure the derivative liability for convertible notes. The Merger Agreement contemplates a concurrent equity financing transaction in connection with the Business Combination, based on an agreed pre-money equity valuation with anticipated participation from existing insiders, strategic investors, and institutional investors, subject to closing conditions.

Management’s best estimate of the equity value at conversion is based on the expected transaction price implied by the contemplated financing, which reflects the negotiated pre-money valuation set forth in the Merger Agreement and the expected capitalization at closing. While the business combination had not been completed as of the measurement dates, the implied transaction price per share represents a more direct and observable market-based measure of equity value; therefore, expected volatility and simulation were no longer assumed or applied in the valuation for measurement dates after December 4, 2024. As a result, the valuation of the derivative liability for these periods became primarily sensitive to changes in the assumed equity value per share and the expected timing of conversion, rather than to changes in volatility.

(b) AC Fund I, a series of Climate Angels, LP

Fair valuation of embedded derivatives

The Company uses Monte Carlo Simulation Method for valuation of embedded derivatives. For the purpose of valuation, a simulation analysis was undertaken in which 10,000 scenario simulations were assessed for the Company’s equity value. The option payoff of the simulated equity value, minus the exercise value (i.e., outstanding principal + accrued interest), was considered as the holding value of the embedded derivative.

Based on the fully diluted capital structure of the Company and the valuation inputs/parameters mentioned below, the Company has arrived at the fair value of the embedded derivatives.

The assumptions used in the model were as follows:

Notes to valuation:

Following the execution of the Merger Agreement, the Company updated the valuation methodology used to measure the derivative liability for convertible notes. The Merger Agreement contemplates a concurrent equity financing transaction in connection with the Business Combination, based on an agreed pre-money equity valuation with anticipated participation from existing insiders, strategic investors, and institutional investors, subject to closing conditions.

Management’s best estimate of the equity value at conversion is based on the expected transaction price implied by the contemplated financing, which reflects the negotiated pre-money valuation set forth in the Merger Agreement and the expected capitalization at closing. While the business combination had not been completed as of the measurement dates, the implied transaction price per share represents a more direct and observable market-based measure of equity value; therefore, expected volatility and simulation were no longer assumed or applied in the valuation for measurement dates after December 4, 2024. As a result, the valuation of the derivative liability for these periods became primarily sensitive to changes in the assumed equity value per share and the expected timing of conversion, rather than to changes in volatility.