NOTE 4—NOTES PAYABLE

In December 2023, the Company entered into two notes payable with unrelated parties, Hewlett Fund and AIGH Investment Partners, LLC. The notes are for $125,000 each, for a total of $250,000 in borrowings utilized for the funding of NewStem. The notes bear interest at 12% per annum prior to an event of default and at 24% per annum following an event of default and originally matured on December 21, 2024. The maturity date of both notes has been extended by successive loan extension agreements entered into with each holder on March 25, 2025, February 17, 2026 and August 3, 2026, most recently to March 30, 2027, at which time all principal and accrued interest are due and payable. Each extension agreement provides that all other terms and conditions of the notes remain in full force and effect.

The notes provide that principal and accrued interest become due and payable upon the earlier of the stated maturity date or the closing of a capital raise, which the notes define as any transaction, whether debt, equity or any combination thereof, to raise capital for the Company. The notes further provide that, in the event of a capital raise, each holder is entitled to participate in that transaction and to tender its note, valued at 133% of the amounts owed under the note on the closing date of the transaction, as payment for any securities issued to that holder in the transaction.

The Company completed a capital raise on March 13, 2026 through the issuance of common stock for cash proceeds of $250,000 (see Note 5) and has entered into other financing transactions since the notes were issued. Neither holder elected to participate in, or tendered its note in connection with, any such transaction, and neither holder demanded repayment nor accelerated its note. The Company has accrued interest on the notes at 12% per annum in all periods presented. Subsequent to June 30, 2026 and prior to the issuance of these financial statements, the Company entered into waiver and confirmation agreements with both holders under which each holder confirmed that interest has accrued and continues to accrue at 12% per annum, confirmed the maturity date of March 30, 2027, and waived any right it may have had, arising from any financing transaction completed on or prior to the date of those agreements, to accelerate its note, to participate in or tender its note, or to assert an event of default (see Note 8). Accordingly, no interest has been accrued at the default rate in any period presented, and no liability has been recorded in respect of these provisions.

Interest expense related to these notes was $19,350 and $14,876, respectively, for the six months ended June 30, 2026 and 2025. Interest expense related to these notes was $9,818 and $7,479, respectively, for the three months ended June 30, 2026 and 2025.

Notes payable related parties are summarized as follows:

SCHEDULE OF LONG TERM NOTES PAYABLE

The notes payable summarized above were originally issued with maturities greater than one year. Since their original maturity dates, the notes have been extended from time to time, in each case for a period of less than one year from the date of extension. Accordingly, all amounts are due within one year of each balance sheet date presented and are classified as current liabilities, and no amounts have been classified as long-term.

The weighted average interest rate on the Company’s notes payable, all of which are classified as current, was approximately 10.3% at June 30, 2026 and December 31, 2025.

In May 2022, the Company entered into note agreements with Jan Loeb, our Executive Chairman and Jerry Wolasky, a shareholder and member of the Board, to borrow up to an aggregate of $600,000 for working capital needs. The note agreements were amended in March 2024 to increase the total borrowing to $650,000 and extend the maturity date. The note agreements were refinanced in August 2024 providing for total borrowings of $750,000. The agreements provide for interest at a rate of 10% per annum and matured December 31, 2025. As of the date of these financial statements, the full amount of $750,000 has been funded pursuant to these agreements and the maturity dates have been previously extended to June 30, 2026, and subsequently to March 30, 2027. Interest expense related to these agreements was $48,550 and $42,774 for the six months ended June 30, 2026 and 2025, respectively. Interest expense related to these agreements was $24,577 and $22,511 for the three months ended June 30, 2026 and 2025, respectively.

The Company has in place a note payable with a shareholder for $336,000. The note bore no interest included a guarantee which was identified as an embedded derivative. This note agreement was amended in May 2025 to provide for a fixed amount of interest of $36,000 in lieu of the guarantee. This interest was added to note principal. This amendment, which was determined to be accounted for pursuant to the provisions of ASC 470 for troubled debt restructurings with related parties, ended the discounting of the note from the zero interest rate and the separate recording of an embedded derivative, as the note now bears interest and contains no identifiable embedded derivative. As such, the relief of the guarantee was recorded as an adjustment to equity and interest expense of $36,000 was accrued and treated as a reduction to equity. Beginning October 1, 2025, the note began to bear interest at a rate of 10% per annum. The note matures on December 31, 2026. Interest expense related to this note was $17,585 and $8,901, respectively, for the six and three months ended June 30, 2026.

Note Payable Litigation Funding Agreement

On February 11, 2022, the Company entered into a nonrecourse litigation funding agreement (the “Agreement”) with Omni Bridgeway (Fund 4) Invt. 3 L.P. (“Omni”) related to a previously settled arbitration. The Agreement provided for Omni to fund all costs related to the arbitration up to $1,000,000 in exchange for an assignment of a certain portion of rights to and interest in claims related to this arbitration. The agreement provided for specific calculations of the portion of any claims collected to be received by Omni with the remainder collectible by the Company. Additionally, the agreement provided for repayment of funded costs pursuant to the same multiple calculations in the event of a favorable outcome that does not include the collection of claims.

During July 2023, the arbitration was settled. As a result of the ruling, the liability became probable and reasonably estimable, and the Company recorded the full liability due to Omni as of December 31, 2023. This liability consisted of expenses funded by Omni of $933,065, including $310,000 advanced for working capital, and related fees or investment return to Omni calculated as contractual multiples of funding totaling $1,886,131 for a total liability at inception of $2,819,196. This agreement bore interest at 5% per annum beginning January 2024 and was payable in full on January 10, 2025. Prior to settlement of the Agreement, the Company accrued interest of $37,400 during the six and three months ended June 30, 2025.

The Company began negotiations for settlement of this Agreement during 2024 and on May 9, 2025, the Company entered into a Settlement Agreement and Release with our JV partner in NetCo, C. P. Group, and Omni whereby our interest in NetCo was sold in exchange for funds of $1,300,000 which were paid directly to Omni by CP Group in full settlement and release of all liabilities related to the Litigation Funding Agreement. This resulted in the noncash settlement in full of $2,997,025 including accrued and unpaid interest.

Bridge Loan

In February 2025, Jan Loeb, Executive Chairman, began advancing funds to the Company for operating expenses in the form of an interim bridge loan until alternate funding sources can be found. The bridge loan matured on December 31, 2025 and has been extended to March 30, 2027. The Company is accruing interest at 10% per annum for these advances. The net principal balance outstanding at June 30, 2026 is $140,115. The total advanced during the six months ended June 30, 2026 was $28,248. Additionally, $50,000 was repaid during the six months ended June 30, 2026. The total advanced during the year ended December 31, 2025 was $161,867. Interest expense related to these advances was $8,176 and $3,892, respectively, during the six and three months ended June 30, 2026. Interest expense related to these advances was $1,452 and $1,022, respectively, during the six and three months ended June 30, 2025.

Convertible Debt

In April 2024, the Company borrowed $100,000 from unrelated parties pursuant to convertible debt agreements accounted for as debt. These agreements bear interest at 10% per annum and matured on December 30, 2025. The maturity dates have been extended to March 30, 2027. The unpaid principal balance of these notes and any accrued interest may be converted into shares of the Company’s common stock at a conversion price of $0.13 per share. Interest accrued related to these agreements was $6,066 and $5,950 respectively, during the six months ended June 30, 2026 and 2025. Interest accrued related to these agreements was $3,071 and $2,992, respectively, during the three months ended June 30, 2026 and 2025.