Note 3 – Related Parties

SBS Management LLC

During the year ended March 31, 2025 and 2024, SBS Management LLC, a company controlled by Mr. Scott Stevens who is a shareholder of the Company, received management consulting fees and made advancement of funds to the Company to pay certain expenses. These expenses consisted of $150,000 and $150,000, respectively, of management fees; $6,000 and $6,000, respectively, for IT expenses; $60,000 and $60,000, respectively, for reimbursement of rent; and $105,490 and $75,055, respectively, of advances to the Company to cover certain operating expenses. As of March 31, 2025 and 2024, $1,165,491 and $844,001 were included in Accounts payable – related parties on the accompanying balance sheet. These advances are unsecured, non-interest bearing, and with no formal terms of repayment.

Gray’s Peak Capital

During the year ended March 31, 2025 and 2024, Gray’s Peak Capital (“Gray’s Peak”), a company founded by a shareholder of the Company, made advances to the Company to cover certain operating expenses. These advances are unsecured, non-interest bearing, with no formal terms of repayment. As of March 31, 2025 and 2024, the amounts due Gray’s Peak for these advances were $396,100 and $260,620, respectively, and was included in accounts payable – related parties on the accompanying balance sheet.

Gray’s Peak Capital – Note Payable

On January 15, 2023 and June 15, 2023, the Company entered into two separate Mezzanine Secured Note (“Notes”) in the principal amount up to $200,000 and $500,000, respectively, with Gray’s Peak Private Credit LLC. For 30 days after the date of the Note, the Note bears interest at 7.5%. After the 30th day, the Note bears interest at 2% per month until paid in full. The Note matures and becomes due and payable in full on the 4^th and 6^th month anniversary of the loan (May 15, 2023 and December 15, 2023). The Company has the option of prepaying any part of the Note in whole or in part without any premium or penalty. In 2023, Gray’s Peak extended the due date of the January 15, 2023 Note to August 31, 2023 and in December 2023, the June 15, 2023 note was extended further to March 31, 2024 and then to September 30, 2024, the note was further extended to December 31, 2025. The June 15, 2023 amounts borrowed were repaid in September 2023.

The Notes are secured by a pledge by the Company of favor of Gray’s Peak of all of the assets and property of the Company, including without limitation all R&D tax credits, goods, tangible property, machinery, owned equipment, furniture, fixtures, vehicles, parts, accounts, deposit accounts, letter-of-credit rights, chattel paper, contract rights, documents, instruments, investment property, choses in action, general intangibles, goodwill and intellectual property, of any kind or nature, wherever located, in which Company has an interest now or in the future, and which are now existing or hereafter created or acquired, together with any and all additions, replacements, accessions and substitutions thereto or therefore, and any proceeds thereof excluding equipment leased by the Company (collectively called the “Collateral”). Gray’s Peak interest is senior to the unsecured debt or lenders of the Company and the Company’s equity holders. Upon the occurrence of any Event of Default, as defined in the agreement, the principal sum, all accrued and unpaid interest owing thereon and all costs and expenses payable pursuant to this Note, shall, at the sole option of Gray’s Peak and with submission of written notice, become immediately due and payable. 

As of March 31, 2025 and March 31, 2024, the principal balance outstanding was $243,000 and $143,000, respectively. The notes were included in notes payable – related party on the accompanying consolidated balance sheet of which $60,197 and $19,453 of interest was accrued and included in accrued expenses as of March 31, 2025 and March 31, 2024, respectively.

Management

As of March 31, 2025 and 2024, $433,497, respectively, was included in accounts payable – related parties on the accompanying consolidated balance sheet.