NOTE 8 – RELATED PARTY TRANSACTIONS

Accrued Compensation – Salary and Wages

CEO and Scientific Advisors

The Company has an employment agreement with its CEO, a services agreement with its Acting Chief Financial Officer (“CFO”), and consulting agreements with its two scientific advisors, each of whom is also a director and a founder of the Company (the “scientific advisors”) (see Note 9).

Effective January 1, 2025, an amendment to the CEO’s employment agreement was executed and amended the following provisions: (i) annual salary was increased from $300,000 to $350,000, (ii) a guaranteed calendar year bonus equal to 30% of his annual salary was established versus milestone-based bonuses, and (iii) the CEO is entitled to receive 500,000 shares of common stock every six months (issued as 250,000 per calendar quarter) for so long as he remains with the Company. At June 30, 2026 and September 30, 2025, the Company had accrued compensation of $200,488 and $324,238, respectively, related to amounts owed to the CEO pursuant to the terms of the employment agreement.

Effective January 1, 2025, the scientific advisors aggregate monthly compensation was increased to $17,500 from $10,000. At June 30, 2026 and September 30, 2025, the Company had accrued compensation of $234,000 and $362,500, respectively, related to amounts owed to the two scientific advisors pursuant to the terms of the consulting agreements.

Any accrued compensation amounts earn interest at 8%. The CEO and scientific advisors can convert any accrued compensation into shares of common stock at a conversion rate equal to the fair market value, defined as the OTC Market price, on the date of conversion (see Note 9).

Acting Chief Financial Officer

Effective May 21, 2026, the Company engaged a consulting firm through which its Acting Chief Financial Officer provides services to the Company. The arrangement provides for current cash compensation of $6,250 per month and deferred cash compensation of $7,750 per month. Current cash compensation is expensed as incurred. Deferred cash compensation accrues monthly and is recorded within accrued compensation and related expenses. At June 30, 2026, accrued compensation includes $11,000 of unpaid salary.

The aggregate deferred cash compensation is payable in a lump sum no later than December 31, 2026, and is accordingly classified as current liability. If the Company’s Board of Directors determines in good faith that payment on that date would jeopardize the Company’s ability to continue as a going concern, the Company may defer payment until the Board determines that payment would no longer do so, but in no event beyond May 21, 2028. Any amount not paid when due will accrue interest at 6% per annum, compounding monthly. No such interest had accrued as of June 30, 2026. 

At June 30, 2026 and September 30, 2025, accrued compensation and related expenses owed to these individuals totaled $484,392 and $781,392, respectively.

Former Chief Business Officer and Interim Chief Financial Officer

At June 30, 2026 and September 30, 2025, the Company owed its former Chief Business Officer and Interim Chief Financial Officer $38,904 primarily from accrued compensation which has been included in accrued compensation on the condensed consolidated balance sheets.

Board Approved Tax Reimbursement Policy

On April 15, 2026 the Board of Directors adopted a policy, effective retroactive to January 1, 2024, under which the Company pays or reimburses income taxes, penalties and interest arising for covered individuals on compensation derived from the Company, in an amount sufficient to satisfy the recipient’s tax on the payment itself (the “Policy”). Each covered individual is a related party, and the Policy was approved by a Board on which every member is an interested party. The Policy continues on an open-ended basis unless modified or terminated by the Board, and any modification applies prospectively only. The covered individuals are the Company’s Chief Executive Officer and two directors who provide scientific advisory services under consulting arrangements. The compensation covered is salary, consulting fees, bonuses and common stock issued for services.

At June 30, 2026, accrued compensation and related taxes accrued in respect of the Policy were $1,646,487 which were primarily recorded during the three months ended June 30, 2026 when the Policy was approved resulting in additional operating expense of $1,567,919 during the three and nine months ended June 30, 2026. The accrual amount comprises taxes on compensation recorded in current and prior periods, the additional compensation provided under the Policy, and related penalties and interest. The additional compensation, the amount by which payments under the Policy exceed the tax liabilities they settle, is $525,388, measured on the applicable federal and state tax tables. A higher measurement is supportable, and additional expense of up to approximately $330,000 in excess of the amount accrued is reasonably possible, being that difference together with amounts that would arise if certain positions taken by the Company were not sustained. Management does not consider any amount in excess of that estimate to be reasonably possible. Amounts under the Policy are payable in cash, directly to the taxing authority or to the covered individual as reimbursement. Certain tax filings relating to these amounts are pending, and the Company expects to file or amend them. No amount has been paid under the Policy, and no covered individual has requested payment under it, through the date of this report. At June 30, 2026, the total amount accrued of $1,646,487 has been reflected separately on the condensed consolidated balance sheet as tax reimbursement policy liabilities.

Management has evaluated the matter under ASC 450, Contingencies. Based on information currently available, the Company concluded that a liability of approximately $1.65 million was probable and reasonably estimable and has recorded such amount as of June 30, 2026. The estimates require significant judgment, including assumptions regarding compensation valuation, applicable tax rates, the characterization of certain compensation arrangements, and the potential outcome of tax compliance activities. Actual amounts ultimately incurred may differ from current estimates as tax filings are completed, additional information becomes available, and taxing authorities evaluate the Company’s filings.

At June 30, 2026, the liabilities resulting from the Policy are comprised of the following:

During the three and nine months ended June 30, 2026, expenses associated with the Policy have been classified as follows, within the condensed statements of operations:

Advances from Related Parties

The Company’s CEO and scientific advisors have, from time to time, made working capital advances to the Company. These advances bear interest at 8% per annum and are unsecured, short-term in nature and repayable on demand. During the nine months ended June 30, 2026 and 2025, the Company received $0 and $72,843 of advances from these related parties. At June 30, 2026 and September 30, 2025, advances owed to the scientific advisors for these advances totaled $84,137. At June 30, 2026 and September 30, 2025, there were no advances outstanding from the CEO.

Accrued Interest – Related Parties

The accrued compensation and advances received from the CEO and the scientific advisors bear interest at 8%. As of June 30, 2026 and September 30, 2025, accrued interest on the advances due to the CEO and the scientific advisors was $10,214 and $5,410, respectively, and accrued interest on the accrued compensation was $82,217 and $49,405, respectively. At June 30, 2026 and September 30, 2025, aggregate accrued interest was $92,431 and $54,815, respectively.

During the three and nine months ended June 30, 2026, interest expense amounted to $9,708 and $37,616, respectively, which is included in interest expense on the condensed unaudited consolidated statements of operations.  During the three and nine months ended June 30, 2025, interest expense amounted to $12,305 and $31,403, respectively, which is included in interest expense on the condensed unaudited consolidated statements of operations.