v3.26.1
DERIVATIVE LIABILITIES
 12 Months Ended
Dec. 31, 2025
DERIVATIVE LIABILITIES  
DERIVATIVE LIABILITIES

NOTE 12 – 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:

 

 

 

December 31, 2025

 

 

November 17, 2025

 

Volatility

 

 

90%

 

 

90%

Dividend Yield

 

 

0%

 

 

0%

Risk-free rate

 

 

3.41%

 

 

3.56%

Expected term

 

1.29 years

 

 

1.38 years

 

Stock price

 

$0.68

 

 

$1.02

 

Conversion price

 

$0.984

 

 

$0.984

 

Derivative liability fair value

 

$3,463,727

 

 

$4,546,912

 

Number of shares issued upon conversion, exercise, or satisfaction of required conditions

 

 

11,053,795

 

 

 

6,097,561

 

 

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 nine months ended December 31, 2025:

 

Fair value as of December 31, 2024

 

$-

 

Establishment of derivative liability upon issuance of notes

 

 

4,546,912

 

Change in fair value of derivatives

 

 

(1,083,185 )

Fair value as of December 31, 2025

 

$3,463,727

 

 

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 gain of $1,083,185 during the year ended December 31, 2025.