NOTE 6 — CONVERTIBLE NOTES PAYABLE

Walleye Opportunities Master Fund Ltd

February 2023 Convertible Notes - Walleye Opportunities Master Fund Ltd

On February 21, 2023, the Company entered into a securities purchase agreement (the “February Purchase Agreement”) with Walleye Opportunities Master Fund Ltd (“Walleye”). Pursuant to the February Purchase Agreement, the Company issued senior convertible notes in the aggregate principal amount of $4,000,000, which notes shall be convertible into shares of common stock at the lower of (a) 120% of the closing price of the common stock on the day prior to closing, or (b) a 10% discount to the lowest daily volume weighted average price (“VWAP”) reported by Bloomberg of the common stock during the 10 trading days prior to the conversion date  .

On February 21, 2023, the Walleye, under the February Purchase Agreement purchased a senior convertible promissory note (the “February Note”) in the original principal amount of $2,500,000 and a warrant to purchase 29,434,850 shares of the Company’s common stock. The maturity date of the February Note is February 21, 2024 (the “Maturity Date”). The February Note bears interest at a rate of 5% per annum. The February Note carries an original issue discount of 2%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the February Note. The Company also issued a warrant to the initial investor that is exercisable for shares of the Company’s common stock at a price of $0.0389 per share and expires five years from the date of issuance.

The terms of the February Note were amended pursuant to the March 2024 Note (discussed below). The amendment changes the conversion price to $0.03 and extends the maturity date to December 1, 2024. This note is currently in default and has incurred a $109,079 penalty that has been added to the principal. In addition, the interest rate has increased to 15%.

April 2023 Convertible Note - Walleye Opportunities Master Fund Ltd

Pursuant to the February Purchase Agreement, on April 10, 2023, Walleye purchased a senior convertible promissory note (the “April Note”) in the original principal amount of $1,500,000 and the Company issued warrants for the purchase of up to 17,660,911 shares of the Company’s common stock to Walleye. The April Note bears interest at a rate of 5% per annum. The April Note carries an original issue discount of 2%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the April Note. The April Note is convertible into shares of common stock at $0.03 per share. Pursuant to the terms of the May Note (discussed below) the number of warrants was increased to 29,498,714. This note is currently in default and has incurred a $375,000 penalty that has been added to the principal. In addition, the interest rate has increased to 15%.

May 2023 Convertible Note - Walleye Opportunities Master Fund Ltd

On May 26, 2023, the Company entered into that certain Securities Purchase Agreement (the “May Purchase Agreement”) with Walleye, pursuant to which Walleye purchased a senior convertible promissory note in the aggregate original principal amount of $1,714,285.71 (the “May Note”) and warrants to purchase 44,069,041 shares of the Company’s common stock (the “May Warrants”).

The May Note matures 12 months after issuance and bears interest at a rate of 5% per annum, as may be adjusted from time to time in accordance with Section 2 of the May Note. The May Note has an original issue discount of 30%. The Company may not prepay any portion of the outstanding principal amount, accrued and unpaid interest or accrued and unpaid late charges on principal and interest, if any, except as specifically permitted by the terms of the May Note. The May Note is convertible into shares of common stock at $0.0389 per share.

This May Note is currently in default and has incurred a $428,571 penalty that has been added to the principal. In addition, the interest rate has increased to 15%.

As consideration for additional funding, in May of 2023, the number of warrants related to the February 2023 note increased from 29,424,850 to 49,164,524 and the number of warrants related to the April 2023 note were increased from 17,660,911 to 29,498,714.  The additional warrants were fair valued and included as a debt discount on the new tranche(s) of funding.

March 2024 Financing Walleye Opportunities Master Fund Ltd.

On March 25, 2024 (the “Issue Date”), the Company and Walleye entered into a Securities Purchase Agreement (the “March Purchase Agreement”), whereby: (i) the Company issued to Walleye (i) a convertible note in the aggregate principal amount of $666,666 (the “March 2024 Note”), (ii) a warrant initially exercisable to acquire up to 22,222,220 shares of Common Stock at an exercise price of $0.03 per share (the “March 2024 Warrant”), and (iii) the parties agreed to amend and restate the Existing Note and Existing Warrant as discussed below.

March 2024 Note 

At any time on or after the Issue Date, the March Investor shall be entitled to convert any portion of the outstanding Conversion Amount (as defined in the March 2024 Note) into validly issued, fully paid and non-assessable shares of Common Stock at a conversion price equal to $0.03 per share, subject to adjustment as set forth in the March 2024 Note. The March 2024 Note bears interest at a rate of 5% per annum, as may be adjusted from time to time, and matures on October 1, 2024 (the “March Note Maturity Date”); provided, however, that the March Note Maturity Date may be extended at the option of the Investor as provided in the March 2024 Note.

This note is currently in default and has incurred a $166,667 penalty that has been added to the principal. In addition, the interest rate has increased to 20%.

As consideration for additional funding, in May of 2024, the number of warrants related to the February 2023 note was increased again from 49,164,524 to 159,142,855. The additional warrants were fair valued and included as a debt discount on the new tranche of funding.

Coventry Enterprises, LLC

June 2024 Note - Coventry Enterprises, LLC

On June 14, 2024, the Company issued a convertible promissory note to Coventry Enterprises, LLC in the aggregate principal amount of $100,000 (which includes $10,000 of Original Issue Discount). The note bears interest at 10% and matures on May 15, 2025. The note is convertible into shares of common stock  at 90% of lowest trade for 20 prior days to conversion. Coventry received 5,000,000 restricted shares of Common Stock as Commitment Shares. As of June 30, 2025, this note has been converted in full for a $0 balance at June 30, 2025.

May 2025 Note - Coventry Enterprises, LLC

On May 27, 2025, the Company issued a convertible promissory note to Coventry Enterprises, LLC in the aggregate principal amount of $300,000 (which includes $30,000 of Original Issue Discount).The Note contains guaranteed interest in the amount of $30,000, with the Principal and Interest due and payable in 10 equal monthly payments in the amount of $33,000 commencing on August 27, 2025 and continuing on the 27^th day of each month thereafter until paid in full by not later than May 27, 2026. Coventry received 15,000,000 restricted shares of Common Stock as Commitment Shares.  

 GS Capital Partners

October 2023 Note - GS Capital Partners

On October 26, 2023, the Company entered into a Securities Purchase Agreement (the “October Purchase Agreement”) with GS Capital Partners (the “GS Capital”) related to the Company’s sale of two 12% convertible notes in the aggregate principal amount of $660,000 (each note being in the amount of $330,000 and containing an original issue discount of $30,000 such that the purchase price of each note is $300,000) (each “Note,” and together the “Notes”) are convertible into shares of the Company’s common stock, par value $0.001 per share, upon the terms and subject to the limitations set forth in each Note. The Company issued and sold the first Note (the “First Note”) on October 26, 2023 (the “First Closing Date” or the “First Issuance Date”). The second note was not funded.

On the First Closing Date, the Company issued 800,000 restricted shares of Common Stock to GS Capital as additional consideration for the purchase of the First Note (the “First Note Commitment Shares”). In addition to the Commitment Shares, the Company agreed to issue 7,500,000 shares of Common Stock to GS Capital (the “Returnable Shares”) for each Note.

As of June 30, 2025, this note has been converted in full for a $0 balance at June 30, 2025.

October 2024 Note - GS Capital Partners

On October 2, 2024, the Company issued a convertible promissory note to GS Capital in the aggregate principal amount of $82,500 (which includes $7,500 of Original Issue Discount). The note bears interest at 10% and matures on December 2, 2024. The note is convertible into shares of common stock upon default at $0.01 per share.

May 2025 Note - GS Capital Partners

On May 13, 2025, the Company issued a convertible promissory note to GS Capital in the aggregate principal amount of $137,500 (which includes $18,500  of Original Issue Discount and fees). The Note contains guaranteed interest in the amount of $16,500. The Company is required to make Principal payments in four installments, each in the amount of $31,250 commencing on the 180-day anniversary of the GS Note Issue Date, with the final payment of the remaining Principal and Interest due on the GS Note Maturity Date. The note is convertible into shares of common stock at $0.02 per share, or $0.01 per share if the Company’s stock trades below $0.02. GS Capital received 2,500,000 restricted shares of Common Stock as Commitment Shares. 

ClearThink Capital Partners

May 2024 Note

On May 24, 2024, the Company issued a convertible promissory note to ClearThink in the aggregate principal amount of $110,000 (which includes $18,000 of Original Issue Discount). The note bears interest at 10% and matures on January 24, 2025. The note is convertible into shares of common stock at $0.025 or $0.0145 if the Company’s common stock trades below $0.02 for more than five consecutive days. As of June 30, 2025, this note has been converted in full for a $0 balance at June 30, 2025.

October 2024 Note

On October 2, 2024, the Company issued a convertible promissory note to ClearThink in the aggregate principal amount of $82,500 (which includes $7,500 of Original Issue Discount). The note bears interest at 10% and matures on December 2, 2024. The note is convertible into shares of common stock upon default at $0.01 per share. ClearThink received 5,000,000 restricted shares of Common Stock as Commitment Shares. As of June 30, 2025, this note has been converted in full for a $0 balance at June 30, 2025.

May 2025 Note

On May 13, 2025, pursuant to that certain Securities Purchase Agreement between the Company and ClearThink, the Company issued a convertible promissory note to ClearThink in the aggregate principal amount of $137,500 (included OID of $12,500). The Note bears interest at 12%, with guaranteed interest of $16,500, and matures on February 13, 2026. The note is convertible into shares of common stock at $0.02 per share, to be adjusted as necessary per the terms of the Note. ClearThink received 2,500,000 restricted shares of Common Stock as Commitment Shares.

Trillium Partners LP

February 2024 Note Trillium Financing

On February 15, 2024, the Company entered into a Securities Purchase Agreement (the “Trillium Agreement”) with Trillium Partners L.P. (“Trillium”), whereby the Company issued and sold to Trillium (i) a promissory note (the “Trillium Note”) in the aggregate principal amount of $580,000 (which includes $87,500 of Original Issue Discount), convertible into Common Stock, upon default, upon the terms and subject to the limitations and conditions set forth in such Trillium Note, and (ii) 4,000,000 restricted shares of Common Stock (the “Commitment Shares”). The Note matures on January 15, 2025 and a one-time interest charge of ten percent (10%) or $58,000 shall be applied to the principal on the date of issuance. The Company has the right to prepay the Trillium Note in full at any time with no prepayment penalty. Accrued unpaid interest and outstanding principal, subject to adjustment, shall be paid in seven payments, each in the amount of $91,142.86 (a total payback to the Holder of $638,000).

Pursuant to the Trillium Note, beginning on the fifth month anniversary of the Issuance Date, and for the next six months after, the Company will make a total of seven (7) equal monthly payments of $91,142.85. In the event that the Company defaults and misses a payment, then the Investor will be able to do a “default conversion. The conversion price (the “Trillium Conversion Price”) is equal to the lower of: (i) the Fixed Conversion Price of $0.03; (ii) the Variable Conversion Price (70% of the lowest trade for the twenty days prior to conversion); and (iii) the Alternative Conversion Price (lowest price of our Common Stock during the period thirty days prior to a default).

This note is currently in default and has incurred a $174,993 penalty that has been added to the principal. In addition, the interest rate has increased to 22% and the conversion rate changed to 70% of the lowest trade for the twenty days prior to conversion. Refer to Note 14 for a discussion of the current litigation with Trillium. 

The Company accounted for the above Convertible Notes according to ASC 815. For the derivative financial instruments that are accounted for as liabilities, the derivative liability was initially recorded at its fair value and is being re-valued at each reporting date, with changes in the fair value reported in the statements of operations.

For the warrants that were issued with each tranche of funding, the Company uses a weighted-average Black-Scholes-Merton option pricing model to value the warrants at inception and then calculates the relative fair value for each loan.

Commitment shares are valued at the closing stock price on the effective date of the promissory note. The value of the shares is accounted for as debt discount.

The Company deducts the total value of all discounts (OID, value of warrants, discount for derivative) from the calculated derivative liability with any difference accounted for as a loss on debt issuance.

The following table summarizes the convertible notes outstanding as of June 30, 2025:

Total interest accrued on the above convertible notes was $1,313,827 and $801,979 as of June 30, 2025 and December 31, 2024, respectively.

A summary of the activity of the derivative liability for the notes above is as follows: