NOTE 4 – NOTES PAYABLE  

Evergreen Convertible Notes Payable and Warrant Liabilities

Effective April 16, 2026, the Company entered into a securities purchase agreement (the “SPA”) with Evergreen Capital Management LLC (“Evergreen”), pursuant to which the Company sold, and Evergreen purchased, (i) a convertible promissory note in the aggregate principal amount of up to $800,000 (the “Note”), and (ii) warrants to purchase up to 600,000 shares of Company common stock (the “Warrants”), for an aggregate purchase price of up to $666,668 (the “Purchase Price”). The Purchase Price was to be paid in four tranches of $166,667 (each, a “Tranche”), with the first Tranche paid at the initial closing of the transaction, and the remaining three Tranches paid to the Company upon (i) the Company’s filing of a registration statement on Form S-1 registering for resale shares of Company common stock issuable upon conversion of the Note, and (ii) receiving comments from the SEC on that registration statement. Evergreen shall retain $10,000 from each Tranche to cover its legal fees and closing costs. The first Tranche was funded on April 16, 2026, and on that date, the Note and Warrants were issued to Evergreen.

On June 17, 2026 (the “Effective Date”), the Company and Evergreen entered into a side letter agreement (the “Letter Agreement”), pursuant to which, among other things: (i) Evergreen’s registration rights, including its piggyback registration rights, were deleted from the SPA; (ii) the number of Warrants to be issued for the four tranches was increased from 600,000 to up to 1,200,000; (iii) Evergreen accelerated the funding of the second and third Tranches such that, on the Effective Date, the Company received net proceeds of $333,334; and (iv) the fourth Tranche in the amount of $166,667 (the “Fourth Tranche”) may be funded at the option of Evergreen, provided that Evergreen’s option to fund the Fourth Tranche will expire upon the maturity date of the Note.

At June 30, 2026, the Company received aggregate net proceeds from the first three Tranches of $470,000, after an original issue discount (“OID”) of $100,000 and Evergreen’s legal fees of $30,000 from the funding of the three tranches and Evergreen received Warrants to purchase up to an aggregate of 900,000 shares of the Company’s common stock. The issuance of the notes pursuant to the April 16 and June 17 Tranches are collectively referred to as the “Notes.”

The Notes mature upon the earlier of (i) 9 months following the issue date set forth in the respective Note, or (ii) the listing of the Company’s common stock on a national securities exchange (an “Exchange Listing”). The Note accrues interest at 10% per annum and is convertible into shares of the Company’s common stock at $1.00 per share, or 80% of the lowest volume-weighted average price during the five trading days preceding conversion upon the occurrence of any event of default; provided, however, that the holder may not convert the Note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock. At June 30, 2026, no event of default had occurred and the default conversion price was not in effect.

Further, the conversion price is subject to adjustment upon a reverse stock split or other capitalization that results in a reduction of the number of outstanding shares of common stock. The conversion price and any other price-based measure used to determine the number of shares of common stock issuable upon conversion shall be proportionately and equitably adjusted such that, following such reverse stock split or recapitalization, the holder shall be entitled to receive upon conversion the number of shares of common stock that the holder would have been entitled to receive had such conversion occurred immediately prior to such reverse stock split or recapitalization, with such adjustment resulting in a conversion price equal to the lowest volume weighted-average price of the common stock during the ten consecutive trading days immediately following the effectiveness of such reverse stock split. The conversion price is also subject to adjustment for any issuances or sales of common stock or common stock equivalents at a price per share that is lower than the applicable conversion price.

The Warrants have a five-year term, are exercisable on a cashless basis, and have an initial exercise price of $1.00, subject to adjustment so that the exercise price under the Warrants equals the applicable conversion price under the Notes. Pursuant to the Warrant, if at any time after the six-month anniversary of the issuance date, the Market Price (as defined in the Warrant) of one share of common stock is greater than the exercise price and the shares of common stock issuable upon exercise of the Warrants are not registered pursuant to an effective registration statement, Evergreen may exercise the Warrants on a cashless basis. The exercise price of the Warrants issued in connection with the Notes are deemed conformed to the conversion price of the Notes and are therefore subject to the same default adjustment. Because the exercise price may be reset to a variable amount determined by reference to the market price of the common stock, the Warrants are not considered indexed to the Company’s own stock under ASC 815-40-15-7C which requires the settlement amount equal the difference between the fair value of a fixed number of shares and a fixed monetary amount. Therefore, the Warrants are classified as liabilities measured at fair value on a recurring basis, with changes in fair value recognized in earnings.

In accordance with ASC 470-20-25-2, we allocated the proceeds received between the Notes and Warrants using the with-and-without method, since the Warrants are classified as a liability. Therefore, $198,612 of the total proceeds were allocated to the Warrants based on the Warrants’ fair value at issuance and have been presented as a discount against the Notes to be amortized into interest expense over the nine-month term of the Notes and an increase to warrant liabilities. The fair value allocation was based on the estimated fair value of the Warrants at each issuance date of April 16 and June 17, 2026 determined using a Black-Scholes pricing model and the following key assumptions: expected term of five years (based on the contractual term of the Warrants), volatility of approximately 93% (based on peer companies over the expected term), risk free rates of 3.91% and 4.27%, respectively, (based on the U.S. Treasury yield curve in effect at the time of grant for the period for the expected term), underlying common stock of $0.49 and $0.32 (30-day volume weighted average price on date of issuance), respectively, per share and dividend rate of 0.00%.

At June 30, 2026, we remeasured the estimated fair value of the warrant liabilities using the Black-Scholes pricing model and the following key assumptions: expected term of approximately five years (based on the contractual term of the Warrants), volatility of approximately 93% (based on peer companies over the expected term), risk free rate of 4.14% (based on the U.S. Treasury yield curve in effect at the time of grant for the period for the expected term), underlying common stock of $0.4079 (30-day volume weighted average price). This resulted in an unrealized loss of $13,752 for the change in the warrant liabilities fair value.   See Note 5 for further fair value measurement related disclosures.

During the three and nine months ended June 30, 2026, we recognized interest expense on the Notes of $5,834.

During the three and nine months ended June 30, 2026, we recognized amortization expense of $45,801 related to the debt discounts for the OID, lender legal fees and warrant liabilities which has been included within interest expense on the condensed consolidated statements of operations. At June 30, 2026, the unamortized debt discount is $282,812.

For the three and nine months ended June 30, 2025, amortization of debt discount related to the convertible note payable amounted to $3,333 and $9,999, respectively, which has been included in interest expense on the accompanying condensed consolidated statements of operations. 

The convertible note payable and unamortized debt discount at June 30, 2026 and September 30, 2025 was as follows:

2024 Convertible Note Payable

On September 9, 2024, the Company and an investor entered into a convertible promissory note agreement providing for the issuance of a note in the principal amount of $20,000. The note was due on September 9, 2025. The principal amount was convertible into shares of common stock of the Company at a conversion price of $1.00 per share. In addition, the Company issued the investor a stock purchase warrant to acquire 40,000 shares of common stock of the Company at a per share price of $0.01. The warrants were immediately exercisable.

In accordance with ASC 470-20-25-2, proceeds from the sale of a debt instrument with stock purchase warrants are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds so allocated to the warrants are accounted for as additional paid-in capital. The remainder of the proceeds are allocated to the debt instrument portion of the transaction. The fair value of the warrants issued to the investor was $40,000. Therefore, the Company recorded debt discount of $13,333 related to the relative fair value of the warrants issued to the investor, which was amortized over the term of the note.

In October 2025, the convertible note and all accrued interest of $22,092 was converted into 22,092 shares of common stock (see Note 7) at the stated conversion price of $1.00.

SBA Loan

On April 9, 2020, the Company received a loan from the Small Business Administration pursuant to the Paycheck Protection Program (“PPP”) in the principal amount of $48,750. The note bears interest at a variable rate of approximately 1% and matured in April 2022. The Company applied for forgiveness of the loan. No determination has been received and the loan remains outstanding. 

Financed Payable

During the three months ended June 30, 2026, the Company entered into a financing agreement to finance $45,144 of insurance premiums due on various policies. The financed amount is due in fixed monthly payments of $4,807 for a period of ten months and bears interest at 13.9%. The balance of $18,059 remaining on this financing liability has been presented within current liabilities on the accompanying condensed consolidated balance sheets as of June 30, 2026.