NOTE 9 – CONVERTIBLE NOTES PAYABLE

The Company has the following convertible notes payable as of June 30, 2026 and December 31, 2025:

SCHEDULE OF CONVERTIBLE NOTES PAYABLE

On March 16, 2026, the Company entered into a securities purchase agreement, pursuant to which the Company agreed to issue, at one or more closings, unsecured promissory notes in an aggregate funded amount of up to $2,000,000 and warrants to purchase shares of the Company’s common stock at an exercise price of $1.75 per share, subject to adjustment from time to time.

In additional closings on April 7, 2026 and April 9, 2026, the Company issued Convertible Notes to entities unaffiliated with the Company in the aggregate principal amount of $1,750,000 in exchange for $1,712,000 of net proceeds after deducting issuance costs. The Convertible Notes bear interest at a rate of 10% per annum and mature 18 months from the date of issuance. The outstanding principal and accrued interest under the Convertible Note are convertible, at the option of the holder at maturity, into shares of the Company’s common stock at a fixed conversion price of $1.60 per share.

In connection with the issuance of these Convertible Notes, the Company also issued five-year Warrants to purchase up to 175,000 shares of the Company’s common stock at an exercise price of $1.75 per share. The Company determined the fair value of the Warrants at the grant date to be approximately $197,000 using the Black-Scholes option pricing model. The net proceeds from the financing were allocated between the Convertible Note and the Warrants on a relative fair value basis. As a result, approximately $172,000 of the net proceeds was allocated to the Warrants and recorded as a debt discount. In addition, the Company incurred $38,000 of issuance costs associated with the financing, which were also recorded as a debt discount. Accordingly, the total debt discount recorded in connection with the Convertible Notes was approximately $211,000. The debt discount is being amortized to interest expense over the term of the applicable Convertible Note using the effective interest method.

As of June 30, 2026, the Company amortized $23,000 of the debt discount, the outstanding aggregate principal balance of the Convertible Notes was $1,750,000, with an unamortized debt discount of $188,000, resulting in a net carrying value of $1,562,000.