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Derivative Liability | 6 Months Ended
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Jun. 30, 2025
Derivative Liability [Abstract] |
DERIVATIVE LIABILITY | NOTE 7 – DERIVATIVE LIABILITY As stated in Note 6, June 2024 Convertible Note, the Company determined that the convertible note payable contains an embedded derivative feature in the form of a conversion provision which is adjustable based on future prices of the Company’s common stock. In accordance with ASC 815-10-25, each derivative feature is initially recorded at its fair value using the Black-Scholes option valuation method and then re-value at each reporting date, with changes in the fair value reported in the statements of operations. However, on June 5, 2024 and December 14, 2024, management determined the probability of failing to make an amortization payment when due was remote and as such the fair value of the embedded conversion feature had been estimated to be zero. On December 15, 2024, Mast Hill waived all amortization payments required to be made under the June 2024 Convertible Note. On May 23, 2023, the Company issued 9,000 warrants with an exercise price of $67.50 exercisable until May 23, 2028 to Mast Hill and a third party as a finder’s fee. Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the 9,000 warrants was classified as a derivative liability on May 23, 2023. In March 2025, 8,333 warrants held by Mast Hill were cashless exercised. On June 30, 2025, the estimated fair value of the rest of 667 warrants was $217. The estimated fair value of the warrants was computed as of June 30, 2025 using Black-Scholes option-pricing model, with the following assumptions: stock price of $2.78, volatility of 107.08%, risk-free rate of 3.68%, annual dividend yield of 0% and expected life of 2.9 years. On July 6, 2023, the Company issued 222 warrants with an exercise price of $67.50 exercisable until July 6, 2028 to a third party as a finder’s fee. Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the 222 warrants was classified as a derivative liability on July 6, 2023. On June 30, 2025, the estimated fair value of the 222 warrants was $78. The estimated fair value of the warrants was computed as of June 30, 2025 using Black-Scholes option-pricing model, with the following assumptions: stock price of $2.78, volatility of 106.70%, risk-free rate of 3.68%, annual dividend yield of 0% and expected life of 3.0 years. On October 9, 2023, the Company issued 4,060 warrants with an exercise price of $37.50 exercisable until October 9, 2028 to Mast Hill and a third party as a finder’s fee. Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the 4,060 warrants was classified as a derivative liability on October 9, 2023. On March 26, 2025, 3,500 warrants held by Mast Hill were cashless exercised. On June 30, 2025, the estimated fair value of the rest of 560 warrants was $350. The estimated fair value of the warrants was computed as of June 30, 2025 using Black-Scholes option-pricing model, with the following assumptions: stock price of $2.78, volatility of 106.06%, risk-free rate of 3.68%, annual dividend yield of 0% and expected life of 3.3 years. On March 7, 2024, the Company issued 9,450 warrants with an exercise price of $30.00 exercisable until March 7, 2029 to Mast Hill and a third party as a finder’s fee. Upon evaluation, the warrants meet the definition of a derivative liability under FASB ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. Accordingly, the fair value of the 9,450 warrants was classified as a derivative liability on March 7, 2024. On April 3, 2025, 8,750 warrants held by Mast Hill were exercised on a cashless basis. On June 30, 2025, the estimated fair value of the 700 warrants was $526. The estimated fair value of the warrants was computed as of June 30, 2025 using Black-Scholes option-pricing model, with the following assumptions: stock price of $2.78, volatility of 101.32%, risk-free rate of 3.68%, annual dividend yield of 0% and expected life of 3.7 years. On June 5, 2024, the Company issued 152,000 warrants to Mast Hill and a third party as a finder’s fee (see Note 6). Upon evaluation, the warrants meet the definition of a derivative liability under ASC 815, as the Company cannot avoid a net cash settlement under certain circumstances. On March 31, 2025 and June 5, 2024, management determined the probability of failing to make an amortization payment when due to be remote and as such the fair value of the Second Warrant had been estimated to be zero. Accordingly, the fair value of the 72,000 warrants with an exercise price of $9.75 exercisable until June 5, 2029 was classified as derivative liability on June 5, 2024. On June 5, 2025, the Second Warrant was not cancelled and was retained by Mast Hill. Accordingly, the initial fair value of the Second Warrant of $621,353 was classified as derivative liability on June 5, 2025 and recorded as interest expense – amortization of debt discount. In April 2025, 66,667 warrants held by Mast Hill were cashless exercised. On June 30, 2025, the estimated fair value of the 85,333 warrants was $124,382. The estimated fair value of the warrants was computed as of June 30, 2025 using Black-Scholes option-pricing model, with the following assumptions: stock price of $2.78, volatility of 99.37%, risk-free rate of 3.68%, annual dividend yield of 0% and expected life of 3.9 years. Increases or decreases in fair value of the derivative liability are included as a component of total other (expenses) income in the accompanying condensed consolidated statements of operations and comprehensive loss. The changes to the derivative liability resulted in a decrease of $561,176 and $180,337 in the derivative liability and the corresponding increase in other income as a gain for the three months ended June 30, 2025 and 2024, respectively. The changes to the derivative liability resulted in a decrease of $446,816 and $211,549 in the derivative liability and the corresponding increase in other income as a gain for the six months ended June 30, 2025 and 2024, respectively.

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