Note 5 Promissory Notes

During the years ended December 31, 2021, 2022 and 2023, the Company issued several promissory notes with warrants. The Company evaluated the warrants and concluded that those warrants qualified as equity instruments under Accounting Standards Codification (ASC) 815, Derivatives and Hedging, and ASC 815-40, Contracts in Entity’s Own Equity.

Due to the limited trading activity and pricing transparency of the Company’s Common Stock, observable market inputs for valuing the warrants were determined to be unreliable. Specifically:

Due to these limitations, valuation techniques that depend on quoted market prices cannot be reliably applied.

Accordingly, the Company applied a market-based valuation technique using the most recent private placement price of $0.018 per share (dated November 2, 2021) as a proxy for fair value. This valuation approach is considered a Level 3 fair value measurement within the fair value hierarchy due to the use of unobservable inputs. The fair value of the freestanding warrants as of the reporting date was estimated based on this Level 3 input, and the corresponding equity classified warrants has been recorded under additional paid-in capital. Management believes this approach provides the most reasonable estimate of fair value in the absence of observable market data. 

Significant unobservable input used in the valuation was the private placement price of $0.018/share. No sensitivity analysis is presented due to the absence of a reliable market range of inputs.

Promissory note issued during year ended December 31, 2021

On December 28, 2021, the Company issued a promissory note with a principal amount and cash proceeds of $500,000. The promissory note accrued interest at an annual rate of 12%. Upon the occurrence of an event of default, the promissory note accrued default interest at an annual rate of 15%. The promissory note matured on April 5, 2022.

For the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $33,288 and $33,288, respectively, in the condensed consolidated interim statements of operations. As of March 31, 2026 and December 31, 2025, $500,000 in principal was outstanding.

Promissory notes issued during year ended December 31, 2022

The promissory note accrued interest at an annual rate of 10%. Upon the occurrence of an event of default, the promissory note accrued default interest at an annual rate of 15%. The convertible note matured on February 14, 2022.

The fee payable of $15,000 was amortized to consolidated statements of operation over the term of the promissory note.

For the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $10,171 and $10,171, respectively, in the condensed consolidated interim statements of operations.

As of March 31, 2026 and December 31, 2025, $165,000 in principal was outstanding.

The fee payable of $15,000 was amortized to consolidated statements of operations over the term of the promissory note.

For the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $9,247 and $9,247, respectively, in the condensed consolidated interim statements of operations.

As of March 31, 2026 and December 31, 2025, $150,000 in principal was outstanding.

For the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $6,164 and $6,164, respectively, in the condensed consolidated interim statements of operations. As of March 31, 2026 and December 31, 2025, $125,000 in principal was outstanding.

Promissory notes issued during year ended December 31, 2023

In February 2023, the Company issued a promissory note $44,950 to a third party that is non-interest bearing, unsecured and repayable on demand.

On February 3, 2023, the Company entered into a securities purchase agreement with a lender pursuant to which the Company borrowed $88,760 and issued a promissory note that accrues interest a 12% per annum and is repayable in 10 monthly instalments starting March 15, 2023. As of December 31, 2023, the outstanding balance was $79,884, which was in default for failure to make required payments. Upon the occurrence of an event of default, the promissory note accrued default interest at an annual rate of 22% and is convertible into the Company’s Common Stock at a conversion price equal to 75% multiplied by the lowest trading price for the Common Stock during the ten trading days prior to the conversion date. The lender may not hold more than 4.99% of the Company’s outstanding Common Stock.

For the three months ended March 31, 2026 and 2025, the Company recorded interest expense of $6,697 and $6,697, respectively, in the condensed consolidated interim statements of operations.