XML 30 R19.htm IDEA: XBRL DOCUMENT v3.25.3
Convertible Notes Payable
 9 Months Ended
Sep. 30, 2025
Convertible Notes Payable [Abstract]  
CONVERTIBLE NOTES PAYABLE

13. CONVERTIBLE NOTES PAYABLE

 

The amount of convertible notes payable consisted of the following:

 

   September 30,   December 31, 
   2025   2024 
         
Beginning  $553,086   $1,100,723 
Addition   1,679,198    
-
 
Interest expenses   33,475    77,363 
Payment   
-
    
-
 
Conversion   (589,418)   (625,000)
Balance  $1,676,341   $553,086 

 

Convertible notes payable I

 

On December 27, 2023, the Company issued a convertible  promissory note with a principal amount of $1.10 million. Floor Price was $2.272 per share of Common Stock. The Note was unsecured. On the date thereof, the Company shall reserve 500,000 shares of Common Stock from its authorized and unissued Common Stock to provide for all issuances of Common Stock under the Note (the “Share Reserve”). Lender elected to redeem a portion of the Note in redemption conversion shares. Lender redemption conversion shares were 237,543 shares, amount $625,000, at a price of $2.631 per share in 2024. Lender redemption conversion shares were 61,205 shares, amount $140,658, at a price of $2.298 per share and 197,541 shares, amount of $448,759, at a price of $2.272 per share in January and September 2025, respectively. As of September 30, 2025, the balance of this convertible notes payable was $nil.

Convertible notes payable II

 

On July 28, 2025(“Beginning Date”), the Company entered into a Convertible notes Agreement (“Agreement”) with an institutional investor (the “Investor”), pursuant to which the Investor desires to purchase from the Company one or more pre-paid purchases (each a “Pre-Paid Purchase” and together the “Pre-Paid Purchases”) in the aggregate purchase amount of up to $10,000,000 for the purchase of the Company’s common stock. The Agreement will end on the earlier of (i) the date that is two years from the Beginning Date, (ii) the date Company has sold $10,000,000.00 in Pre-Paid Purchases hereunder; and (iii) termination of this Agreement (the “Commitment period”). On September 15, 2025, the Company issued 60,000 of the Company’s Common Stock to the Investor as a commitment fee (the “Commitment Shares”). All Pre-Paid Purchases will have a 8% original issue discount (“OID”), and will bear an interest rate of 8% per annum.

 

 On July 28, 2025, the Company received its first funding of $800,000 as the Initial Pre-Paid Purchase, which is calculated from an original amount of $884,000, minus a $64,000 OID and minus $20,000 that covers the Investor’s legal, accounting, and other related costs under the purchase agreement.

 

On September 22, 2025, the Company received its second funding of $1,000,000 from the Investor, which is calculated from an original amount of $1,080,000, minus a $80,000 OID.

 

Concurrently, on September 22, 2025, the Company has issued 1,445,000 Common Stock (the “Pre-Delivery Shares”) according to the agreement to the Investor at par value $0.001 per share. The Investor is not permitted to sell, assign, transfer, pledge, encumber, hypothecate or otherwise dispose of (“transfer”) such Pre-Delivery Shares. However, during the period beginning on any day in which Investor delivers a Purchase Notice to Company and ending on the date of delivery of the Purchase Shares by Company covered by such Purchase Notice, Investor may transfer a number of Pre-Delivery Shares up to the number of Purchase Shares covered by the applicable Purchase Notice. The Purchase Price will be 82% multiplied by the lowest daily volume-weighted average price during the ten trading days immediately preceding a conversion. Following the end of the Commitment Period and the repayment of all outstanding Pre-Paid Purchases, Investor will deliver to Company a number of shares of common stock equal to the number of Pre-Delivery Shares issued within 20 trading days, and the Company will pay Investor $0.001 for each share.

 

The Company assessed the convertible note payable II under ASC 815, identifying there is embedded conversion features and concluded that the conversion feature satisfied the requirement of “fixed-to-fixed” criterion and is considered indexed to the Company’s own stock. Therefore, the conversion feature eligible for a scope exception from derivative accounting in accordance with ASC815-10-15-74 and the Company would not bifurcate the conversion feature, and accounts for the convertible note payable II as a liability in its entirety.

 

The Company recognized the issuance costs and the discount of convertible note payable II of $304,400 as a direct deduction from the face amount of the Convertible Loan II in accordance with ASC835-30-45-1A. The debt issuance cost was amortized as amortization of debt issuance costs using the effective interest method, over the Commitment period of the convertible note payable II.

 

As of September 30, 2025, the Company has received an aggregate of $1,800,000 from the Investor out of the total $10,000,000 committed amount, the balance of convertible notes payable II was $1,676,341, with a carrying value of $1,964,000, net of deferred financing costs of $287,659 was recorded in the unaudited condensed consolidated balance sheets. The amortization of debt issuance costs was $2,925 for the nine months ended September 30, 2025.

 

As of September 30, 2025, the Company issued a total of 1,505,000 Common Stock to the Investor, including 60,000 Common Stock as Commitment Shares and 1,445,000 Common Stock as the Pre-Delivery Shares.