XML 26 R12.htm IDEA: XBRL DOCUMENT v3.25.2
Debt
 6 Months Ended
Jun. 30, 2025
Debt [Abstract]  
DEBT

6. DEBT

 

2022 Convertible notes (amended from notes payable) — related parties

 

On March 21, 2022, the Company issued a promissory note in the amount of $160,000 to Inscobee, one of its shareholders. On June 3, 2022, the Company issued another $100,000 promissory note to Inscobee (together, and as amended, the “2022 Convertible Notes”). The 2022 Convertible Notes bear interest at 5% per annum and mature on the earlier of (a) the closing of an equity financing with proceeds to the Company of at least $3 million, or (b) July 15, 2022.

 

On December 5, 2023, the Company amended their promissory notes to be convertible and extended the maturity date of the convertible notes with the related parties to be the earlier of (i) December 31, 2026 or (ii) consummation of a qualified offering. The notes are convertible at a price of $1 per share. The purchase of convertible notes and cancellation of the old promissory notes was accounted for as a debt extinguishment that did not result in a gain/loss on extinguishment due to related party treatment. The conversion option was valued utilizing the Black-Scholes model, with the following inputs: volatility of 92.22%, current stock price of $1.96, expected dividend yield of 0% and a risk-free rate of return of 4.33%. The resulting value of the convertible option of $158,099 based on the allocation of relative fair value to cash proceeds, was applied towards additional paid-in capital and added as a discount on the convertible note. The note will be accreted over the remaining period through maturity at the calculated effective interest rate of approximately 41.4%.

 

In connection with the closing of the IPO, the 2022 Convertible Notes and 2021 Convertible Note (defined below) automatically converted into shares of Common Stock. Pursuant to the terms of the 2021 Convertible Note and 2022 Convertible Notes (as amended), all outstanding accrued and unpaid interest owed under the 2021 Convertible Note and 2022 Convertible Notes was to convert into common stock simultaneously with the consummation of an offering of common stock resulting in the listing of the Common Stock on the NYSE American, or other national securities exchange (a “Qualified Offering”). An aggregate of $660,000 outstanding principal together with $112,576 and accrued interest under the 2021 Convertible Note and 2022 Convertible Notes was converted to Common Stock, resulting in the issuance of an aggregate of 297,133 shares of Company’s Common Stock, based on a conversion price of $2.60 per share, as set forth in the 2021 Convertible Note and 2022 Convertible Notes. As of the date of the conversion, the outstanding balances for the 2021 Convertible Note and 2022 Convertible Notes were $235,439 and $151,237, respectively, net of the unamortized debt discounts of $164,561 and $108,763. The total of unamortized debt discounts for the 2021 Convertible Note and 2022 Convertible Notes in the aggregate amount of $273,324 as of the date of the conversion was reflected within additional paid in capital, and the carrying aggregate amount of the 2021 Convertible Note and 2022 Convertible Notes of $386,676 along with accrued outstanding interest for the 2021 Convertible Note and 2022 Convertible Notes in the aggregate amount $112,576 as of the date of the conversion are reflected within condensed statement of changes in shareholders’ equity (deficit).

 

As of December 31, 2024, there was accrued interest in connection to the 2022 Convertible Notes of $34,745. Interest expenses were $1,498 and $4,596 for the three and six months ended June 30, 2025, respectively. Interest expenses were $3,134 and $6,268 for the three and six months ended June 30, 2024, respectively.

 

There was accretion on the note’s debt discount in connection to the 2022 Convertible Notes of $5,171 and $15,771 for the three and six months ended June 30, 2025, respectively. There was accretion on the note’s debt discount of $5,373 and $12,844 for the three and six months ended June 30, 2024, respectively.

 

2021 Convertible note — related party

 

On August 30, 2021, the Company issued a convertible promissory note in the amount of $400,000 (“2021 Convertible Note”) to Apimeds Korea. The 2021 Convertible Note bears interest at 5% per annum and matures on the earlier of (a) the sale of the Company or (b) August 30, 2026. The 2021 Convertible Note is convertible at any time up through the maturity date.

On December 5, 2023, the Company amended their convertible note to be convertible at $1 per share and extended the maturity date to be the earlier of (i) December 31, 2026 or (ii) consummation of a Qualified Offering. The repurchase and cancellation of the old note was accounted for as a debt extinguishment that did not result in any gain/loss on extinguishment due to related party treatment. The conversion option was valued utilizing the Black-Scholes model, with the following inputs: volatility of 92.22%, the fair value of the stock of $1.96, expected dividend yield of 0%, and a risk-free rate of return of 4.33%. The resulting value of the convertible option of $240,079, based on the allocation of relative fair value to cash proceeds, was applied towards additional paid-in capital and added as a discount on the convertible note. The note will be accreted over the remaining period through maturity at the calculated effective interest rate of approximately 40.6%.

 

In connection with the closing of the IPO, the 2022 Convertible Notes and 2021 Convertible Note automatically converted into shares of common stock (see 2022 Convertible notes (amended from notes payable) — related parties per above).

 

As of December 31, 2024, there was accrued interest in connection with the 2021 Convertible Note of $66,137 and is included within accrued interest — related party on the accompanying unaudited condensed balance sheets.

 

Interest expenses were $2,301 and $7,068 for the three and six months ended June 30, 2025, respectively. Interest expenses were $4,822 and $9,644 for the three and six months ended June 30, 2024, respectively.

 

There was accretion on the note’s debt discount in connection to the 2021 Convertible Notes of $7,884 and $24,061 for the three and six months ended June 30, 2025, respectively. There was accretion on the note’s debt discount of $8,246 and $19,727 for the three and six months ended June 30, 2024, respectively.

 

2024 Promissory Notes — Related Parties

 

On May 20, 2024, the Company issued a $100,000 promissory note to Inscobee. On August 19, 2024, the Company issued a $150,000 promissory note to Inscobee (together, the “2024 Promissory Notes”). The 2024 Promissory Notes bear interest at 5% per annum and mature on the earlier of (a) the closing of an equity financing by the Company with gross proceeds of at least $3,000,000; or (b) May 19, 2025. On May 16, 2025, the 2024 Promissory Notes were amended to extend the maturity date of for the outstanding principal and accrued interest payment date to May 19, 2026.

 

As of June 30, 2025 and December 31, 2024, there was accrued interest in connection with the 2024 Promissory Notes of $11,959 and $5,760. Interest expenses were $3,116 and $6,199 for the three and six months ended June 30, 2025, respectively, and are included within accrued interest — related party on the accompanying unaudited condensed balance sheet. Interest expenses were $548 for the three and six months ended June 30, 2024.

 

2025 Promissory Note — Related Parties

 

On March 21, 2025, the Company issued a $250,000 promissory note to Apimeds Korea (the “2025 Promissory Note”). The 2025 Promissory Note bears interest at 5% per annum and matures on the earlier of (a) December 31, 2026 or (b) consummation of a Qualified Offering. On May 16, 2025, the 2025 Promissory Note was amended to extend the maturity date of for the outstanding principal and accrued interest payment date to May 19, 2026.

 

As of June 30, 2025, there was accrued interest in connection with the 2025 Promissory Note of $3,390. Interest expenses were $3,082 and $3,390 for the three and six months ended June 30, 2025, respectively, and are included within accrued interest — related party on the accompanying unaudited condensed balance sheet.