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Related Party Transactions
 6 Months Ended
Jun. 30, 2025
Related Party Transactions [Abstract]  
RELATED PARTY TRANSACTIONS

NOTE 6 – RELATED PARTY TRANSACTIONS

 

On May 22, 2025, Amro Albanna, the Chief Executive Officer of the Company loaned $233,000 to the Company. The loan was evidenced by an unsecured promissory note (the “May 22nd Note”). Pursuant to the terms of the May 22nd Note, it will accrue interest at the Prime rate of seven and one-half percent (7.5%) per annum and is due on the earlier of November 22, 2025 or an event of default, as defined therein. As of June 30, 2025, the May 22nd Note was fully paid off.

 

On June 6, 2025, Shahrokh Shabahang, the Chief Innovation Officer of the Company loaned $70,000 to the Company. The loan was evidenced by an unsecured promissory note (the “June 5th Note”). Pursuant to the terms of the June 5th Note, it will accrue interest at the Prime rate of seven and one-half percent (7.5%) per annum and is due on the earlier of December 5, 2025 or an event of default, as defined therein. As of June 30, 2025, the June 5th Note was fully paid off.

 

On June 20, 2025, Amro Albanna, the Chief Executive Officer of the Company, and Shahrokh Shabahang, the Chief Innovation Officer of the Company, loaned $90,000 and $100,000, respectively, to the Company. The loans were evidenced by an unsecured promissory note (the “June 20th Notes”). Pursuant to the terms of the June 20th Notes, it will accrue interest at the Prime rate of seven and one-half percent (7.5%) per annum and is due on the earlier of July 20, 2025 or an event of default, as defined therein. As of June 30, 2025, the June 20th Notes were fully paid off.

 

Evofem

 

Evofem is a related party of the Company due to the Chief Executive Officer of Evofem being a member of the Company’s Board of Directors.

 

Notes Receivable

 

On April 8, 2025, the Company entered into a Securities Purchase Agreement (the “Evofem April Purchase Agreement”) with Evofem, pursuant to which the Company purchased (i) a senior subordinated convertible note (the “Evofem April Note”) of Evofem in the principal amount of $2,307,692, and (ii) a warrant (the “Evofem April Warrant”) to purchase 149,850,150 shares of Evofem common stock for a purchase price of $1,500,000. The Evofem April Warrant is exercisable into shares of common stock of Evofem at an exercise price of $0.0154, subject to adjustment and may be exercised on a cashless basis. The Evofem April Warrant may not be exercised by the Company if, after giving effect to such an exercise, the Company would beneficially own in excess of 9.99% of Evofem stock. The fair value of the Evofem April Warrant was $235,389. The Evofem April Warrant is exercisable for a term of five years. The Company had fully funded the $1,500,000 on April 22, 2025.

 

The Evofem April Note is a senior subordinate obligation of Evofem and will accrue interest at a rate of 8% per annum, which will adjust to 12% upon an Event of Default (as defined in the Evofem April Note). The Evofem April Note is initially convertible into shares of common stock of Evofem at a conversion price of $0.0154 per share, subject to adjustment as described therein. The Evofem April Note may not be converted by the Company if, after giving effect to such conversion, the Company would beneficially own in excess of 9.99% of Evofem common stock. Unless earlier converted, or redeemed, the Evofem April Notes will mature on April 8, 2028.

 

The Company recorded an original issuance discount of $807,692, recorded a debt discount of $235,389 from the fair value of the warrants, and paid $1,500,000. The value of the warrants was being treated as a debt discount on the note. The debt discount from both the warrants and the original issuance discount are being amortized using the effective interest method.

As of June 30, 2025, the Evofem April Note has an outstanding principal balance of $2,307,692, an unamortized debt discount of $955,677, and accrued interest of $41,981.

 

On June 26, 2025, the Company entered into a Securities Purchase Agreement (the “Evofem June Purchase Agreement”) with Evofem, pursuant to which the Company purchased (i) a senior subordinated convertible note (the “Evofem June Note”) of Evofem in the principal amount of $1,423,077, and (ii) a warrant (the “Evofem June Warrant”) to purchase 92,407,592 shares of Evofem common stock for a purchase price of $925,000. The Evofem June Warrant is exercisable into shares of common stock of Evofem at an exercise price of $0.0154, subject to adjustment and may be exercised on a cashless basis. The Evofem June Warrant may not be exercised by the Company if, after giving effect to such an exercise, the Company would beneficially own in excess of 9.99% of Evofem stock. The fair value of the Evofem June Warrant was $92,682. The Evofem June Warrant is exercisable for a term of five years. The Company had fully funded the $925,000 on June 26, 2025.

 

The Evofem June Note is a senior subordinate obligation of Evofem and will accrue interest at a rate of 8% per annum, which will adjust to 12% upon an Event of Default (as defined in the Evofem June Note). The Evofem June Note is initially convertible into shares of common stock of Evofem at a conversion price of $0.0154 per share, subject to adjustment as described therein. The Evofem June Note may not be converted by the Company if, after giving effect to such conversion, the Company would beneficially own in excess of 9.99% of Evofem common stock. Unless earlier converted, or redeemed, the Evofem June Notes will mature on June 26, 2028.

 

The Company recorded an original issuance discount of $498,077, recorded a debt discount of $92,682 from the fair value of the warrants, and paid $925,000. The value of the warrants was is being treated as a debt discount on the note. The debt discount from both the warrants and the original issuance discount are being amortized using the effective interest method.

 

As of June 30, 2025, the Evofem June Note has an outstanding principal balance of $1,423,077, an unamortized debt discount of $578,266, and accrued interest of $1,248.

 

For the period ended June 30, 2025, the fair value of each warrant granted with the notes receivable was estimated using the assumption and/or factors in the Black-Scholes Model as follows:

 

Exercise price  $0.0154 
Expected dividend yield   0%
Risk free interest rate   7.79-3.88%
Expected life in years   0.50-0.73 
Expected volatility   175-180%

The risk-free interest rate assumption for warrants granted is based upon observed interest rates on the United States Government Bond Equivalent Yield appropriate for the expected term of warrants.

 

The Company determined the expected volatility assumption for warrants granted using the historical volatility of Evofem’s common stock.

 

The dividend yield assumption for warrants granted is based on the Evofems’s history and expectation of dividend payouts. Evofem has never declared nor paid any cash dividends on its common stock.

 

Fifth Amendment to Amended and Restated Merger Agreement

 

On March 23, 2025, the Company, Adicure, Inc., and Evofem entered into Amendment No. 5 to the Amended and Restated Merger Agreement (“Amendment No. 5”), pursuant to which, the parties agreed that (i) Evofem shall use commercially reasonable efforts to hold the Company Shareholders Meeting (as defined under the A&R Merger Agreement) no later than September 26, 2025, (ii) the Company shall invest an additional $1,500,000 in Evofem no later than April 7, 2025 in exchange for additional shares of F-1 Preferred Stock and/or, at the Company’s option, senior subordinated notes of Evofem, and (iii) the End Date shall be extended to September 30, 2025. See Note 13 for the current status of the Evofem transaction.