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Related Party Transactions
 12 Months Ended
Dec. 31, 2025
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 5. RELATED PARTY TRANSACTIONS

 

Founder Shares

 

On May 17, 2022, the Sponsor purchased 1,940,625 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. On September 23, 2022, the Company and the Sponsor entered into a share exchange agreement pursuant to which the Sponsor exchanged 1,940,624 Founder Shares for 1,940,624 shares of Class A common stock. As a result of the share exchange, the Founder Shares consisted of 1,940,624 shares of Class A common stock and 1 share of Class B common stock. On January 20, 2023, the Sponsor forfeited for no consideration and the Company canceled 215,625 of such Founder Shares, resulting in 1,724,999 Founder Shares remaining outstanding of Class A common stock and 1 share of Class B common stock. The 1 share of Class B common stock will automatically be canceled at the time of the initial Business Combination. The holder of the 1 share of Class B common stock will have the right to elect all of the directors prior to the initial Business Combination and the holders of the shares of Class A common stock will not be entitled to vote on the election of directors during such time.

 

The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (1) one year after the completion of a Business Combination or (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 180 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property.

 

Promissory Note — Related Party

 

On May 17, 2022, the Company issued a non-interest bearing unsecured promissory note to the Sponsor (the “Promissory Note”) as amended on January 20, 2023 and as further amended as of March 31, 2023, pursuant to which the Company may borrow up to an aggregate principal amount of $400,000 (as amended). On November 21, 2023, the Promissory Note was further amended to permit the Company to pay certain expenses of the Sponsor which would reduce the principal balance of the Promissory Note by the same amount. On March 27, 2024, the maximum amount available under the Note was further amended and increased to $1,090,000. On June 25, 2024, the maximum amount available under the Note was further amended and increased to $1,780,000. On September 16, 2024, the maximum amount available under the Note was further amended and increased to $1,980,000. On September 30, 2024, the maximum amount available under the Note was further amended and increased to $2,280,000. On November 29, 2024, the maximum amount available under the Note was further amended and increased to $2,780,000. On February 21, 2025, the maximum amount available under the Note was further amended and increased to $3,530,000.

 

On March 24, 2025, the Promissory Note was further amended and restated in its entirety, in order to provide, among other things, (1) that the maturity date of the Promissory Note is May 31, 2025; provided, however, that if Trailblazer completes an initial business combination, the maturity date of the Promissory Note shall be extended for an additional eighteen (18) months from the closing of the initial business combination, (2) for certain post-business combination transaction participation rights for the Sponsor as well as most favored nation rights for the Sponsor with respect to certain post business combination transactions and (3) for equal monthly payments of $125,000 due commencing on the first business day of the calendar month following the month in which Trailblazer closes its initial business combination. On May 29, 2025, the Note was further amended, pursuant to which (i) the maximum amount available to borrow under the Note was further increased by an additional $500,000 to $4,030,000 and (ii) the maturity date of the Note was amended to be the earlier of July 30, 2025 or the closing of the Company’s initial business combination. As of December 31, 2025 and 2024, there was $0 and $2,529,445, respectively, outstanding under the Promissory Note. The Promissory Note was extinguished on July 29, 2025 through the issuance of the second amended and restated promissory note agreement (as described below).

 

Second Amended and Restated Promissory Note and Forward Settlement Contract

 

On July 29, 2025, the Company entered into a second amended and restated promissory note (“Second Amended and Restated Promissory Note”) with the Sponsor, pursuant to which (i) the maturity date of the Note was amended to be the later of September 15, 2025 or the closing of the Company’s initial business combination and (ii) the outstanding principal balance of the Note will be converted into preferred stock of the Corporation at the closing of the initial business Combination with a stated value equal to 200% of the outstanding principal amount.

 

The Company assessed whether the issuance of the Second Amended and Restated Promissory Note constituted a debt modification or extinguishment and determined that the old note was extinguished and replaced with a new instrument. Accordingly, the original debt (Promissory Note – Related Party) was derecognized and the new instrument was recognized at fair value, with the resulting loss on extinguishment recorded in earnings. The Company established the initial fair value of the new instrument as of July 29, 2025, using a calculation prepared by a third party valuation team which takes into consideration market assumptions which are disclosed in Note 9.

 

As of September 16, 2025, the cash payment option of the promissory note has expired, and the settlement of the promissory note is through issuance of new class of preferred stock, an embedded forward settlement contract, if a business combination occurs. On September 30, 2025, the Company entered into an amendment to the Second Amended and Restated Promissory Note with the Sponsor, pursuant to which the amount of the Note was further increased by $300,000 to $4,330,000 subject to the same settlement terms. On November 24, 2025, the Company entered into an amendment to the Second Amended and Restated Promissory Note with the Sponsor, pursuant to which the amount of the Note was further increased by $250,000 to $4,580,000. The Second Amended and Restated Promissory Note was further amended on December 4, 2025 (as described below).

 

Convertible Promissory Note and Forward Settlement Contract - Related Party

 

On December 4, 2025, the Company entered into an amendment to the Second Amended and Restated Promissory note with the Sponsor, which still provides that in the event that the Company completes an initial Business Combination, all of the outstanding principal balance will convert into new classes of preferred stock of the Company or its successor with a total stated value of such preferred stock equal to 300% (100% Series B + 200% Series C) of the outstanding principal amount. Should the Business Combination not occur, the Convertible Promissory Note and Forward Settlement Contract would remain outstanding.

 

For the year ended December 31, 2025, the Company recorded an extinguishment loss of $6,222,973, which is the difference between the carrying amount of the note of $3,741,731 and fair value of the instrument of $9,964,704, and change in fair value charge of $217,470, which are presented in the consolidated statements of operations. As of December 31, 2025, the Convertible Forward Settlement Contract has a fair value of $11,007,174.

 

Related Party Loans

 

In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor or certain of the Company’s directors and officers may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. Otherwise, the Working Capital Loans would be repaid only out of funds held outside the Trust Account. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into units of the post-Business Combination entity at a price of $10.00 per unit. The units would be identical to the Placement Units (see Note 4). As of December 31, 2025 and 2024, there was no amount outstanding under the Working Capital Loan.