Note 5 – Loan payable due to Eagle – JV partner

On July 17, 2020, the Company entered into a membership agreement with Eagle Equities LLC (“Eagle”) and Ikon Supplies to form HIE, LLC (“HIE”) for the purpose of procuring and selling personal protective equipment. The Company issued convertible promissory notes to Eagle to secure an origination loan and any additional contribution. In the event of a loss of capital, each party was obligated to contribute 33.3% of the loss. HIE has had no operating activities since July 2021. The carrying amount of the Company’s investment in HIE was $0 as of June 30, 2025 and immediately prior to the settlement described below.

The loan payable to Eagle (the “Eagle Debt”) was $442,251 as of June 30, 2025 and was unchanged from fiscal 2021 until the settlement date.

On March 27, 2026, the Company and Eagle entered into a Settlement Agreement and Release (the “Settlement Agreement”), which became effective upon delivery of an executed copy to counsel for the Company on April 1, 2026. Under the Settlement Agreement, the Company paid Eagle $44,000 in cash and issued 500,000 shares of common stock with a fair value of $22,500, measured using the $0.045 closing price of the Company’s common stock on the measurement date, in full satisfaction of the $442,251 Eagle Debt and in exchange for a mutual general release, including release of the Company’s membership interest in HIE and of the 33.3% loss-contribution obligation. The Eagle Debt balance was $0 as of June 30, 2026.

The Company evaluated the settlement under ASC 470-60, Troubled Debt Restructurings by Debtors, and concluded that the settlement was a troubled debt restructuring. The Company was experiencing financial difficulty: it had defaulted on the obligation in 2021, had reported recurring losses and substantial doubt about its ability to continue as a going concern, and held $385 of cash as of March 31, 2026. Eagle accepted cash and equity with an aggregate fair value of $66,500 in satisfaction of a $442,251 obligation — approximately 15% of the amount owed — which is a concession Eagle would not otherwise have granted. The settlement was effected by a combination of a cash payment and the grant of an equity interest.

The Company recognized a gain on settlement of debt of $375,751 during the year ended June 30, 2026, computed as follows:

The gain is nonrecurring. Because the carrying amount of the HIE investment was $0, relinquishment of the membership interest had no additional effect on the financial statements. Eagle is not a related party of the Company under ASC 850. The settlement is therefore recognized in earnings under ASC 470-50-40. The mutual release extends to claims arising under the Membership Agreement and the operations of HIE. Accordingly, any contingent obligation of the Company to Eagle in respect of HIE was extinguished. See Note 11, Commitments and contingencies.