v3.25.1
NOTES PAYABLE
 9 Months Ended
Apr. 30, 2025
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 6 - NOTES PAYABLE

 

We had the following debt obligations reflected at their respective carrying values on our interim consolidated balance sheets as of April 30,2025 and July 31, 2024:

 

   April 30, 2025   July 31, 2024 
5% Convertible promissory notes  $-   $175,000 
Note payable to Acorn Management Partners, LLC   -    50,000 
Notes payable  $-   $225,000 

 

5% Convertible Promissory Notes

 

On various dates during the month of March 2018, we issued a series of 5% Convertible Promissory Notes (collectively, the “5% Notes”) totaling $750,000 in net proceeds. We incurred no costs related to the issuance of the 5% Notes. The 5% Notes bear interest at the rate of five percent (5%) per annum, compounded annually and matured one-year from the date of issuance. At April 30, 2025, and July 31, 2024, accrued but unpaid interest on the 5% Notes was $0 and $63,914, respectively, which is included in “Accounts payable and accrued expenses” on our interim consolidated balance sheets.

 

The 5% Notes are convertible into common shares of the Company at a fixed ratio of two shares of common stock per dollar amount of the face value of the note. The principal terms under which the 5% Notes may be converted into common stock of the Company are as follows:

 

  ● At the option of the holder, the outstanding principal amount of the note, and any accrued but unpaid interest due, may be converted into the Company’s common stock at any time prior to the maturity date of the note.
     
  ● The outstanding principal amount of the note, and any accrued but unpaid interest due, will automatically be converted into the Company’s common stock if at any time prior to the maturity date of the note, the Company concludes a sale of equity securities in a private offering resulting in gross proceeds to the Company of at least $1,000,000.

 

At April 30, 2025, all outstanding 5% Notes were settled for common stock. Management negotiated an amendment with all remaining noteholders extending the maturity date and subsequently converted all outstanding 5% Notes resulting in a gain of $151,508 that was recognized in Gain (loss) on extinguishment of debt on the interim consolidated financial statements.

 

Note Payable to Acorn Management Partners, LLC

 

On August 11, 2020, we agreed to repurchase 1,000,000 shares of our common stock from Acorn Management Partners, LLC (“AMP”). As consideration for the share repurchase, we issued a $50,000 promissory note bearing interest a 6.0% per annum and due one-year from the date of issuance (the “Acorn Note”). In the event we default under the terms of the Acorn Note, we were required to deliver 1,000,000 shares of our common stock back to AMP in full satisfaction of the obligation. The purchased shares were delivered by AMP directly to the transfer agent on September 8, 2020, and immediately cancelled. At April 30, 2025, and July 31, 2024, accrued but unpaid interest on the Acorn Note was $0 and $11,919, respectively, which is included in “Accounts payable and accrued expenses” on our interim consolidated balance sheets. On April 30, 2025, the note was repaid, and the related accrued interest was extinguished. Management negotiated a settlement of the entire outstanding principal balance and accrued interest resulting in a gain of $13,419 that was recorded in Gain (loss) on extinguishment of debt on the interim consolidated financial statements.