Note 6 – Debt

Convertible Notes Payable

The Company entered into convertible notes payable as follows as of June 30, 2026. The chart below does not include convertible notes payable that were converted prior to July 1, 2025.

Promissory Notes – Non-related Parties

The Company entered into promissory notes with non-related parties as follows as of June 30, 2026.

Promissory Notes – Related Parties

The Company entered into promissory notes with related parties as follows as of June 30, 2026.

Prior to July 1, 2025

The Company issued convertible debt with detachable warrants for $600,000 during the period ended June 30, 2025. The fair value of the warrants of $802,589 were determined based on a Black-Scholes calculation. Upon initial recognition of the convertible notes, the fair value of issued warrants exceeded the amount of proceeds. The resulting discount to the carrying amount of the convertible notes is amortized over the life of the note and recognized as interest expense under the effective interest method until the earliest of conversion date.

The initial allocation of the proceeds was as follows:

The debt discount was amortized to interest expense which brought the carrying amount of the convertible notes to $600,000. The total interest expense was $802,589. The debt was converted into 810 shares of Series D Preferred stock with a stated value of $1,000 per share. The Series D preferred stock was valued at $810,000 using Black Scholes. This resulted in a loss on extinguishment of debt of $210,000.

Subsequent to July 1, 2025

Convertible Promissory Notes

On August 1, 2025, the Company entered into a twelve-month promissory note in the principal amount of $187,000 with an investor. The note contained a one-time interest charge of $22,440 (12%) which was added to the face amount of the note. The note is convertible into common stock at an original 25% discount to the average of the five trading day period immediately preceding the conversion date. The note is not convertible until the earlier of (i) an Event of Default; or (b) the date the Company fails to pay any Amortization payment (as defined in the Note) which commences January 30, 2026 and runs through the maturity date. The conversion price has now been updated as the Company had subsequent note issuances that contain a conversion price lower than the original conversion price contained in this note. The Company failed to make their required Amortization payment which triggered a default. As a result the Company recorded an additional discount of $148,729 which is reflected as a derivative liability. The Company is in default of this note effective January 30, 2026 and is required to recognize default interest at 15% per annum as a result and recorded an additional $13,090 in accrued interest through June 30, 2026.

On November 10, 2025, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $7,280 in transaction costs and legal fees were netted from the proceeds received by the Company.

On November 10, 2025, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $7,280 in transaction costs and legal fees were netted from the proceeds received by the Company.

On November 18, 2025, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $7,280 in transaction costs and legal fees were netted from the proceeds received by the Company. On January 26, 2026, the investor converted $8,252 of principal of this convertible note, together with a $1,750 conversion fee, into 8,512 shares of common stock.

On November 20, 2025, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $3,780 in transaction costs fees were netted from the proceeds received by the Company.

On November 20, 2025, the Company entered into a nine-month promissory note in the principal amount of $150,000 with an investor. The note bears interest at a rate of 5%. The note is convertible into common stock at any time after the issuance date at a conversion price of $0.01 per share. The note is subject to an adjustment of this conversion price based on subsequent sales. Should a conversion price be lower, then the conversion price will be adjusted accordingly. On November 25, 2025 the conversion price changed to $0.008. A $25,000 charge for legal fees was netted from the proceeds received by the Company. On August 20, 2026, this note was in default.

On November 20, 2025, the Company entered into a nine-month promissory note in the principal amount of $225,000 with an investor in connection with an Equity Line of Credit Agreement entered into between the Company and the investor. The note bears interest at a rate of 8%. The note is convertible into common stock at any time after the issuance date at a conversion price of $0.01 per share. The note is subject to an adjustment of this conversion price based on subsequent sales. Should a conversion price be lower, then the conversion price will be adjusted accordingly. On November 25, 2025 the conversion price changed to $0.008. The entire note balance of $225,000 for transaction costs was netted from the proceeds received by the Company. See below for additional disclosure on the Equity Line of Credit. On August 20, 2026, this note was in default.

On November 25, 2025, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $3,780 in transaction costs fees were netted from the proceeds received by the Company. In June 2026, the investor converted $25,000 of this convertible note.

On March 9, 2026, the Company entered into a twelve-month promissory note in the principal amount of $60,000 with an investor. The note contained a one-time interest charge of $7,200 (12%) which was added to the face amount of the note. The note is convertible into common stock at any time after the issuance date at a 35% discount multiplied by the lowest trading price of the common stock during the ten trading day period preceding the conversion date. A total of $3,780 in transaction costs fees were netted from the proceeds received by the Company.

Promissory Notes – Non-related Parties

On April 21, 2026, the Company entered into a Promissory Note with an individual in the amount of $5,000 with a maturity date of the earlier of (i) October 21, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $5,000 note. Interest shall accrue at 10% per annum on this note.

On April 22, 2026, the Company entered into a Promissory Note with an individual in the amount of $25,000 with a maturity date of the earlier of (i) October 22, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $25,000 note. Interest shall accrue at 10% per annum on this note.

On May 27, 2026, the Company entered into a Promissory Note with an individual in the amount of $10,000 with a maturity date of the earlier of (i) November 27, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $10,000 note. Interest shall accrue at 10% per annum on this note.

On June 5, 2026, the Company entered into a Promissory Note with an individual in the amount of $10,000 with a maturity date of the earlier of (i) December 5, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $10,000 note. Interest shall accrue at 10% per annum on this note.

Promissory Notes – Related Parties

On April 10, 2026, the Company entered into a Promissory Note with an individual in the amount of $27,500 with a maturity date of the earlier of (i) October 10, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $27,500 note. Interest shall accrue at 10% per annum on this note. This investor had made advances to the Company and then converted those advances on April 10, 2026 into a formalized note agreement.

On May 19, 2026, the Company entered into a Promissory Note with an individual in the amount of $10,000 with a maturity date of the earlier of (i) November 19, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $5,000 note. Interest shall accrue at 10% per annum on this note.

On May 19, 2026, the Company entered into a Promissory Note with an individual in the amount of $5,000 with a maturity date of the earlier of (i) November 19, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $5,000 note. Interest shall accrue at 10% per annum on this note.

On June 25, 2026, the Company entered into a Promissory Note with an individual in the amount of $5,000 with a maturity date of the earlier of (i) December 25, 2026 and (ii) the Company’s issuance or sale of debt or equity to one or more investors who are not Affiliates, officers, directors, employees or existing shareholders of the Company in one transaction or a series of related transactions, in a priced equity financing round with a fixed pre-money valuation, where the Company receives aggregate proceeds of at least $1,000,000 excluding the amount of principal and accrued interest under the $5,000 note. Interest shall accrue at 10% per annum on this note.

The Company recognized $28,680 in discounts on the related and non-related party promissory notes for the 33,000 common shares issued and 6,000 accrued common shares that were for inducements provided to the lenders for entering into these notes under ASC 470-20. There was $9,831 recorded as amortization for this discount in the year ended June 30, 2026.

Equity Line of Credit

On November 20, 2025, we entered into the Purchase Agreement with the CM Selling Stockholder (the “CM Purchase Agreement”), pursuant to which the CM Selling Stockholder has agreed to purchase from us up to $15,000,000 of our common stock (subject to certain limitations). Also, on November 20, 2025, we entered into a Registration Rights Agreement, with the CM Selling Stockholder, pursuant to which we agreed to file a registration statement with the SEC to register the Selling Stockholder’s resale of shares of common stock issuable by us pursuant to the CM Purchase Agreement. In addition, pursuant to the CM Purchase Agreement, we issued a Note in the amount of $225,000, (representing commitment fee valued at 1.5% of the CM Purchase Agreement amount).

The CM Purchase Agreement provides that, upon the terms and subject to the conditions set forth in the CM Purchase Agreement, the Company may issue and sell to CM, and CM shall purchase from the Company, up to $15,000,000, subject to certain limitations including the Selling Stockholder’s 4.99% beneficial ownership limitation.

The CM Purchase Agreement and the sale of up to $15,000,000 of shares of common stock thereunder was approved by the Company’s Board of Directors on November 20, 2025.

The CM Purchase Agreement essentially gives us the right to put (or offer to sell) common stock to CM as described below. Specifically, the purchase and sale terms provided for by the CM Purchase Agreement are summarized as follows:

The foregoing purchase terms are subject to certain conditions and limitations, including daily volume and dollar amount limitations with respect to each type of purchase described above within a given day, and a 4.99% beneficial ownership limitation with respect to CM’s ownership of the Company’s common stock.

The Company agreed to comply with certain covenants and conditions under the CM Purchase Agreement, which are set forth therein.

Unless earlier terminated as provided under the CM Purchase Agreement, the CM Purchase Agreement shall terminate automatically on the earliest to occur of (i) the expiration of the registration statement of which this prospectus forms a part pursuant to Rule 415(a)(5) of the Securities Act, (ii) the date on which CM shall have purchased the maximum amount pursuant to the CM Purchase Agreement, (iii) the date on which the Company’s common stock shall have failed to be listed or quoted on the OTC Markets OTCID Basic Market or on another national securities exchange, (iv) 30 trading days following commencement of bankruptcy proceedings, and (v) the date on which, pursuant to or within the meaning of any bankruptcy law, a custodian is appointed for the Company or for all or substantially all of its property, or the Company makes a general assignment for the benefit of its creditors.

In addition, the Company may terminate the CM Purchase Agreement by giving CM, one trading day’s prior written notice, and CM may terminate the CM Purchase Agreement by giving the Company 10 trading days’ prior written notice upon the occurrence of certain specified events which more particularly set forth in the CM Purchase Agreement, including any failure to maintain the effectiveness of a registration statement registering the resale of the shares of common stock issuable under the CM Purchase Agreement, failure to maintain listing of the common stock on the OTC Markets OTCID Basic Market or a national securities exchange, and the occurrence of certain other enumerated events.

Registration Rights Agreement

In connection with the CM Purchase Agreement, on November 20, 2025 the Company also entered into a Registration Rights Agreement with CM pursuant to which the Company agreed to register CM’s resale of the shares of common stock issuable under the CM Purchase Agreement (such shares, the “ELOC Shares”) on a registration statement on Form S-1 or S-3 filed with the SEC within 30 days of this Agreement and to cause such registration statement to be declared effective the earlier of (A) the 60th day following the date on which the Company was required to file such registration statement, if such registration statement is subject to review by the SEC, and (B) the third business day following the date the Company is notified by the SEC that such registration statement will not be reviewed. Like the CM Purchase Agreement, CM has agreed to waive the timing discussed in this paragraph but not the obligation. The Company filed a Form S-1 on December 8, 2025.

Interest Expense and Amortization of Discounts

In connection with the aforementioned convertible notes, promissory notes – non-related parties and promissory notes - related parties, the Company in the year ended recorded $532,115 in finance expense. As of June 30, 2026 there is $39,059 in accrued interest.  The finance expense consisted of the following:

A summary of the finance expense is as follows:

For the year ended June 30, 2026, the Company recorded $547,031 in amortization of discount associated with these convertible notes payable, and promissory notes for related and non-related parties. The unamortized discount as of June 30, 2026 is $247,137.  The Company also amortized $160,724 in discount on Series B preferred stock for a total amortization expense of $707,755.