Company: TGNT
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001477932-25-005790
Chunk: 91

Company: Totaligent, Inc.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 8
Chunk 91
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   100,000   -       Total           $911,335  $681,335  *The conversion price is the average closing bid price for the 10 trading days prior to the conversion date multiplied by 80%, not to exceed $0.01.**The conversion price is fixed at $0.01 per share.*** In default as of June 30, 2025.

 F-14Table of Contents

Accounting considerations for notes with variable conversion prices  The Company evaluated the notes under ASC 815 Derivatives and Hedging (“ASC 815”). ASC 815 generally requires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. The material embedded derivative features consisted of the embedded conversion option. The conversion option bears risk of equity which were not clearly and closely related to the host debt agreement and required bifurcation. Current accounting principles that are also provided in ASC 815 do not permit an issuer to account separately for individual derivative terms and features that require bifurcation and liability classification.  Rather, such terms and features must be and were bundled together and fair valued as a single, compound embedded derivative. Accounting considerations for notes with fixed conversion prices  The Company evaluated the notes under ASC 815. ASC 815 generally requires the analysis of embedded terms and features that have characteristics of derivatives to be evaluated for bifurcation and separate accounting in instances where their economic risks and characteristics are not clearly and closely related to the risks of the host contract. There were no embedded instruments which required bifurcation. During the six months ended June 30, 2025 and 2024, the Company recorded $30,907 and $22,579 in interest expense, respectively, related to the convertible notes. During the three months ended June 30, 2025 and 2024, the Company recorded $17,115 and $11,289 in interest expense, respectively, related to the convertible notes.

6. Derivative liabilities  Embedded derivatives The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option. The following tables summarize the components of the Company’s derivative