NOTE 8 – ROYALTY AGREEMENTS LIABILITIES

In November and December 2023, the Company issued 15 promissory note royalty agreements to investors for a total of $417,500. During the fiscal year ended December 31, 2024, the Company issued 3 additional promissory note royalty agreements to investors for an additional $130,000 and had one note payable for $75,000 convert to a royalty agreement for a total of $622,500. These agreements require the Company to pay up to $50 per unit sold in royalties to these investors based on their investment amounts. The units sold royalty obligation shall commence upon the 500th unit that is produced and sold and continue for 6 (six) calendar years from the anniversary date of the receipt of the first royalty payment. On February 28, 2025, the Company produced and sold the 500th unit relating to these royalty agreements. As of March 1, 2025, the Company entered the royalty period, which will continue until March 31, 2031. Since the Company began selling its new line of products in mid-2024, sales are increasing at a rapid rate. It is difficult to estimate the number of units that will be sold during the six-year royalty period. The royalty agreements have a “buy-out” feature, in which the Company can buy-out the remaining term of the agreements for 200% of the investment amount. The Company determined that this 200% “buy-out” price is the most appropriate method to use for the estimated future payments of royalties. In accordance with ASC 835-30, the Company recognizes an effective interest rate of 50% on the royalties paid based on an estimated future payment of royalties. During the year ended December 31, 2025, the Company sold 723 units and reported $45,007 in royalties to be paid. Of the $45,007 in royalties payable accrued in 2025, the Company recognized a reduction of the royalties liabilities of $22,503 and interest expense of $22,504. The royalty liabilities payable is comprised of the following at December 31, 2025 and 2024:

As of December 31, 2025, the Company had paid $15,698 of these royalties and had accrued $29,309 in royalties payable. The royalties payable is comprised of the following at December 31, 2025 and 2024: