NOTE 5: NOTES PAYABLE

Notes Payable

The Company had promissory notes with an aggregate face amount of $144,600, net of unamortized discount of $22,011, or $122,589, at June 30, 2026, compared to $991,567, net of unamortized discount, at June 30, 2025. Related accrued interest amounted to approximately $16,438 at June 30, 2026 and $170,481 at June 30, 2025. The notes payable bore interest at rates ranging from 0% to 18% per annum and were payable at maturity.

All notes listed below were extinguished prior to June 30, 2026, either through the issuance of Series D Convertible Preferred Stock (see Note 7) or through cash repayment, except for the $99,600 note issued in June 2026, which remained outstanding at June 30, 2026 and is presented at $77,589, net of its $22,011 unamortized original issue discount, in Notes Payable on the Consolidated Balance Sheets. In addition to the notes listed below, the Company had separate additional notes totaling $45,000, which are not included in the table below, that also remained outstanding at June 30, 2026 and are presented at their face amount, with no unamortized discount, in Notes Payable on the Consolidated Balance Sheets. See Note 16 – Subsequent Events for developments after June 30, 2026 affecting certain of the Company’s notes payable.

The difference between the face value of each note and the net cash proceeds received represents the original issue discount (OID). OIDs were recorded as a contra-liability (debt discount) and amortized to interest expense using the effective interest method over the contractual term of each note. Amortization of debt discount recognized as interest expense during the fiscal year ended June 30, 2026 was $420,524. In addition, $10,013 of unamortized discount on a promissory note extinguished in the April 2026 Series D exchange was written off and included in the gain on extinguishment of debt (see Note 6 and Note 9).

During fiscal 2026, additions to debt discount included contractual original issue discount, the fair value of commitment shares, the day-one discount associated with derivative features, and $7,720 of debt-issuance costs paid in cash.