12. Licensing Obligation

On August 13, 2025, the Company entered into the APA with Celeniv. Concurrently with the APA, RWI agreed to assign the RWI Second Amended Bridge Loan and the RWI Loan to Celeniv. Additionally, the KTL Note was assigned by its holder to Celeniv. Pursuant to the APA, the Company agreed to sell Celeniv certain purchased intellectual property in exchange for the assignment of the Company’s obligations due under the RWI Second Amended Bridge Loan, the RWI Loan, and the KTL Loan. Immediately prior to the assignment of their obligations, the RWI Second Amended Bridge Loan, the RWI Loan, and the KTL Loan had a total principal value of $33,812, accrued interest of $4,031, accrued paid-in kind interest of $3,835 and a debt discount of $5,955.

In connection with the APA, the Company entered into a License Agreement with Celeniv, granting the Company an exclusive, worldwide, royalty-bearing license under certain intellectual property sold to Celeniv. The Company will pay Celeniv a royalty in an amount equal to 12.5% of the purchase price payable in quarterly installments commencing on the one year anniversary through the earlier of (A) the closing of the Asset Purchase (as defined below) and (B) the fifth anniversary of the License Agreement (including the Negotiation Period). Each quarterly installment is equal to approximately $1,057.

Pursuant to the License Agreement, the Company has the option (the “Option”) to purchase from Celeniv all (and not any part) of Celeniv’s right, title and interest in the Licensed Technology (as defined in the License Agreement) and Licensed Marks (“Asset Purchase”). The Option shall be in effect for a period of five years beginning August 13, 2025 (the “Option Period”). The purchase price for the Asset Purchase shall be as follows: (i) if the Option is exercised on or prior to August 13, 2026, the purchase price shall be a mid-eight digit amount (the “Option Purchase Price”) and (ii) if the Option is exercised after August 13, 2026, the purchase price shall be the Option Purchase Price, plus an amount equal to a low double digit percentage of the Purchase Price, plus the amount of any Quarterly Payments (and penalty interest if any) accrued but unpaid through the date of the closing. If the Company does not exercise the Option before the end of the Option Period, the Option shall lapse, and the Term of the License Agreement shall automatically extend for 90 days (the “Negotiation Period”). If the Option is exercised during the Option Period, the Term of the License Agreement shall be extended through the closing of the Asset Purchase.

Unless terminated earlier or otherwise extended pursuant to the terms of the License Agreement, the License Agreement shall terminate on August 13, 2030. Celeniv may terminate the License Agreement (i) if the Company breaches the terms thereof, unless such breach is cured within 60 days of the receipt of written notice of the breach from Celeniv or (ii) immediately in the event that any action is taken by the Company or its creditors to effectuate the Company’s liquidation, dissolution or winding-up. The License Agreement will automatically terminate upon the closing of the Asset Purchase or may be terminated upon mutual agreement of the parties.

The Company accounted for the APA and the License Agreement as a financing arrangement as it failed the sale criteria of ASC 606-10-25-30. The Company recognized a licensing obligation equal to the future cash payments and the excess of the recorded amount over the future cash payments was recognized as a gain on the Celeniv transaction.

As of December 31, 2025 the licensing obligation was as follows:

 Schedule of Licensing Obligation