Note 10– Notes Payable, Related Parties

On April 28, 2025, the Company entered into an exchange agreement (the “Exchange Agreement”) with Lyle Berman, Claudia Goldfarb and Ira Goldfarb, as holders of the Company’s outstanding promissory notes (the “Outstanding Notes”) with an aggregate principal amount of $2,500,000, maturing August 23, 2025 and bearing interest at 8% per annum. Pursuant to the Exchange Agreement, the holders exchanged their Outstanding Notes for new senior convertible promissory notes (the “Convertible Notes”) in an aggregate principal amount of $2,563,890, representing the principal amount of the Outstanding Notes plus accrued and unpaid interest thereon. In addition, the Company issued Convertible Notes with an aggregate principal amount of $239,928 bearing interest at 6% per annum in connection with notes that matured on April 8, 2025. Convertible Notes were convertible, at the election of the holders, in whole or in part, into shares of the Company’s common stock at the fixed conversion prices specified in the applicable notes (ranging from $0.62 to $0.63 per share), subject to customary anti-dilution adjustments.

The combined $2,803,818 of Convertible Notes mature on April 30, 2030 and accrue simple interest at rates ranging from 6% to 8% per annum, payable semi-annually in arrears on May 1 and November 1, beginning November 1, 2025. At the Company’s election, accrued and unpaid interest on an interest payment date may be added to the principal amount of the applicable Convertible Note in lieu of cash payment.

The Convertible Notes are senior in right of payment to all existing and future indebtedness of the Company and are secured by a security interest in all existing and future assets of the Company. The Convertible Notes may be prepaid by the Company at any time upon ten days’ prior written notice.

The entry into the Exchange Agreement and the transactions contemplated thereby, including the issuance of the Convertible Notes, were approved unanimously by the disinterested members of the Company’s board of directors and the disinterested members of the Company’s audit committee in accordance with the Company’s related-party transaction policy.

Pursuant to Appendix C of the Securities Purchase Agreement entered into on December 31, 2025, $1,404,914 aggregate principal amount of notes held by Claudia and Ira Goldfarb will remain outstanding as a backstop for the Company’s operations (the “Backstop Loan”). The Backstop Loan will remain outstanding as a bona fide debt obligation of the Company and will not be reduced, impaired or otherwise affected by operating losses, restructuring costs or transaction expenses. On April 15, 2026, the Company and the Ira and Claudia Golfarb will determine, in good faith, what portion of the outstanding Backstop Loan balance, if any, will be repaid in cash and what portion, if any, will convert into shares of the Company’s common stock at an agreed conversion price of $0.35 per share.

On December 31, 2025, a portion of the net proceeds from the preferred stock issuance was used to repay $943,868 of principal and $70,365 in interest outstanding under notes payable to Lyle Berman, a related party.

During the twelve months ended December 31, 2024, the Company recorded $696,502 of loss on the early extinguishments of debt related to the accelerated amortization of debt discounts related to the Warrant Exercise Transaction, this amount is included in net gain or loss on discontinued operations.