Convertible Notes

9 Months Ended

Sep. 30, 2025

Convertible Notes

Convertible Notes

Note 7 – Convertible Notes

The components of convertible notes as of September 30, 2025 and December 31, 2024, were as follows:

				Effective			Stated
	Principal		Maturity	Interest			Interest			September 30,			December 31,
Payment date	Amount		date	Rate			Rate			2025			2024
July 15, 2024	$	795,000	July 15, 2025		390	%		10	%	$	-		$	795,000
August 15, 2024	$	326,000	August 15, 2025		398	%		10	%		-			326,000
November 15, 2024	$	100,000	November 15, 2025		511	%		10	%		-			100,000
December 15, 2024	$	75,000	December 15, 2025		815	%		10	%		-			75,000
February 7, 2025	$	1,500,000	February 7, 2026		416	%		10	%		-			-
February 15, 2025	$	575,000	February 15, 2026		631	%		10	%		400,000			-
Total Convertible notes										$	400,000		$	1,296,000
Less: Unamortized debt discount											(336,880	)		(1,099,923	)
											63,120			196,077
Less: Current portion											(63,120	)		(196,077	)
Long-term portion										$	-		$	-

On July 15, 2024 and August 15, 2024, the Company entered into seventeen (17) convertible notes ($1,121,000) and warrants (233,550 shares of common stock). The convertible notes have a term of twelve (12) months, at an interest rate of 10% per annum and warrants are with a term of five (5) years, at exercise price of $3.00 per share. The outstanding principal amount of convertible notes and unpaid interest is convertible at conversion price of the lesser of (i) $2.40 or (ii) a 30% discount to the price of shares issued in connection with a qualified financing. In November and December, the Company entered into three (3) convertible notes ($175,000) and warrants (36,460 shares of common stock). The Company paid 8% financing fee of $89,680, accrued fee of $14,000 and recorded financing fee as debt discount.

In February 2025, the Company entered into eleven (11) convertible notes ($2,075,000) and warrants (432,296 shares of common stock). The convertible notes have a term of twelve (12) months, at an interest rate of 10% per annum and warrants are with a term of five (5) years, at exercise price of $3.00 per share. The outstanding principal amount of convertible notes and unpaid interest is convertible at conversion price of the lesser of (i) $2.40 or (ii) a 30% discount to the price of shares issued in connection with a qualified financing. The Company paid 8% financing fee of $166,000 recorded financing fee as debt discount.

During the nine months ended September 30, 2025, the Company recognized the debt discount of $2,075,000 (Original Issued Discounts of discount of $166,000, warrants of $882,000 and derivative liability of $1,027,000).

In June 2025, seventeen (17) note holders converted convertible notes issued in July and August 2024 of $1,121,000 and accrued interest of $97,353 into 507,661 shares of common stock. As a result, the Company settled convertible notes, accrued interest, debt discount of $381,522, and derivative liability of $2,127,000, and recorded loss on settlement of debt of $2,640,611.

On August 19, 2025, the Company withdrew its registration statement and decided not to proceed with qualified offering. The Company determined that the bifurcated conversion feature was no longer a liability and is now categorized as equity. As a result, the Company reclassified its derivative liability of $1,604,000 to additional paid-in capital.

In July and September 2025, six (6) note holders converted convertible notes issued in November and December 2024 and February 2025 of $1,850,000 and accrued interest of $114,897 into 818,709 shares of common stock. As a result, the Company settled convertible notes, accrued interest, debt discount of $1,324,787, and derivative liability of $354,000, and recorded loss on settlement of debt of $4,130,203.

During the nine months ended September 30, 2025 and 2024, the Company recognized interest expense of $186,405 and $21,014 and amortization of debt discount of $1,131,734 and $72,996, respectively. During the three months ended September 30, 2025 and 2024, the Company recognized interest expense of $49,473 and $20,879 and amortization of debt discount of $310,740 and $72,996, respectively. As of September 30, 2025 and December 31, 2024, the Company recorded accrued interest of $24,878 and $50,723, respectively.

The Company determined that the conversion feature met the definition of a liability in accordance with ASC Topic No. 815-40, Derivatives and Hedging - Contracts in Entity's Own Stock and therefore bifurcated the embedded conversion option once the note becomes convertible and accounted for it as a derivative liability. The fair value of the conversion feature was recorded as a debt discount and “day 1” derivative loss for the excess amount of debt discount and amortized to interest expense over the term of the note.