Convertible Notes Payable

3 Months Ended

Mar. 31, 2026

5. Convertible Notes Payable

The following summarizes convertible notes payable activity during the three months ended March 31, 2026:

Schedule of Convertible Notes Payable


	2021 Financing		2025 Financing					Total
	Related Party		Non-Related Party		Related Party			Non-Related Party		Related Party
Balance as of January 1, 2026	$	100,000	$	870,000	$	1,640,000		$	870,000	$	1,740,000
Notes issued		-		110,000		225,000			110,000		225,000
Principal converted		-		-		(455,000	)		-		(455,000	)
Balance as of March 31, 2026	$	100,000	$	980,000	$	1,410,000		$	980,000	$	1,510,000

The 2021 Notes and 2025 Notes, are together, the “Convertible Notes”. The embedded conversion options associated with the Convertible Notes do not require bifurcation and treatment as a derivative liability.

Related party investors in the Company’s convertible notes consist of an officer, an officer/director of the Company and a beneficial owner of more than 10% of the Company’s outstanding equity securities.

2025 Financing Note

On January 15, 2025, the Board approved a Financing Term Sheet (the “2025 Term Sheet”), which set forth the terms under which the Company will use its best efforts to arrange for financing of a maximum of $10,000,000 (the “2025 Financing”), which amounts will be obtained in several tranches.

Pursuant to the 2025 Term Sheet, the 2025 Notes (defined below) will convert into shares of the Company’s Series D-1 Preferred Stock twelve months after the issue date of a 2025 Note.

The 2025 Financing will be in the form of unsecured convertible loans from the investors (the “2025 Note Investors”) and evidenced by convertible promissory notes (individually, a “2025 Note” and collectively, the “2025 Notes”). In addition to customary provisions, the 2025 Notes will contain the following provisions:

	(i)	The 2025 Notes bear interest at the rate of eight percent (8%) per annum.

	(ii)	In the event there is a change of control of the Board, the term of the 2025 Notes will be accelerated and all amounts due under the 2025 Notes may be immediately due and payable at the 2025 Note Investors’ option;

	(iii)	The outstanding principal amount and interest payable under the 2025 Notes may be converted early at the 2025 Note Investors’ option into shares of Series D-1 Preferred Stock at a price per share equal to $2.862. Each share of Series D-1 Preferred Stock is convertible into ten (10) shares of common stock; and

	(iv)	The outstanding principal amount and interest payable under the 2025 Notes will automatically convert into shares of the Company’s Series D-1 Preferred Stock twelve (12) months after the issue date of a 2025 Note. Each share of Series D-1 Preferred Stock is convertible into ten (10) shares of the Company’s Common Stock.

During the three months ended March 31, 2026, the Company received 2025 Notes proceeds in the aggregate amount of $335,000, of which $110,000 was from a non-related party and $225,000 was from an officer and director of the Company.

As of March 31, 2026, principal and interest in the amount of $2,390,000 and $96,401, respectively, remains outstanding on the 2025 Notes.

See Note 15 for details on issuances of 2025 Notes subsequent to March 31, 2026.

2021 Financing

On September 20, 2022, the Board approved the closure of the 2021 Financing.

As of March 31, 2026, principal and interest in the amount of $100,000 and $61,444, respectively, remains outstanding on the 2021 Note.

Interest Expense on Convertible Notes Payable

During the three months ended March 31, 2026, the Company incurred an aggregate of $50,422 in interest expense on outstanding 2021 and 2025 Notes.

During the three months ended March 31, 2025, the Company incurred an aggregate of $58,152 in interest expense on outstanding 2021, 2022, 2024, and 2025 Notes.

As of March 31, 2026 and December 31, 2025, aggregate interest accrued on the Convertible Notes was $157,845 and $143,924, respectively.