v3.26.3
NOTES PAYABLE
 8 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
NOTES PAYABLE

NOTE 10 – NOTES PAYABLE

 

Schedule of notes payable                
    June 30,
2026		     October 31,
2025		  
Convertible Promissory Notes   $ 250,000     $ 250,000  
Unamortized discount     (2,000 )     (7,000 )
Total Notes Payable   $ 248,000     $ 243,000  

 

Convertible Promissory Notes

 

The Convertible Promissory Note is due September 30, 2026. Interest on the Convertible Promissory Note is 8.0% payable annually and together with the principal amount on the maturity date.

 

The Convertible Promissory Note may be prepaid by the Company, in whole, but not in part, at any time prior to the Maturity Date, subject to payment of a premium of 10%, provided that the Company gives the holder fifteen (15) business days notice prior to prepayment, during which period, the investor may elect to convert the Note and accrued but unpaid interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Note) for twenty (20) consecutive trading days ending on the date the Company gives the holder of the Convertible Promissory Note notice of prepayment.

 

The Holder of the Convertible Promissory Note will have the right, at any time during the period commencing on April 1, 2024 and ending on the earliest to occur of the Maturity Date, the date of a Prepayment or the date of an automatic conversion, to convert the Convertible Promissory Note in whole, but not in part, and accrued interest thereon into Shares at a conversion price equal to 80% of the average of the daily VWAP of the Shares (as defined in the Convertible Promissory Note) for twenty consecutive (20) trading days ending on the date the investor gives the Company a notice of conversion, subject to a minimum conversion price of $6.00 per Share.

 

In addition, the Convertible Promissory Note and accrued but unpaid interest thereon will automatically convert into Shares in the event that prior to the Maturity Date, the Company consummates a “Qualified Financing” or a “Qualified Sale” (as defined in the Convertible Promissory Note) at a conversion price equal to 80% of the offering price of Shares sold in the Qualified Financing or 80% of the purchase price per Share to be received by stockholders following consummation of a Qualified Sale.

 

As of November 1, 2024, the balance of the Convertible notes was $725,000. On October 3, 2025, the Company offered each Holder of the Notes the opportunity to convert their Note on October 10, 2025 (including accrued interest outstanding) at a conversion price equal to $3.00 per share (“Conversion Offer”). The Holders of a total of $475,000 principal amount of Notes (plus $39,000 of accrued interest as of October 10, 2025) agreed to accept the Conversion Offer and accordingly received an aggregate total of 171,347 shares of common stock of the Company. In connection with the conversion of the Notes, the Company recorded an inducement expense of $136,000 representing the fair value of the additional shares that were issued in the conversion (the trading price of the Company’s common stock on the date of conversion was $1.59 per share) over the amount of shares convertible pursuant to the original terms of the Notes.

 

In connection with the issuance of the Convertible Promissory Notes, the Company recorded a discount in the amount of $72,000. The discount is being amortized over the term of Convertible Promissory Notes. For the eight months ended June 30, 2026 and the year ended October 31, 2025, $5,000, $39,000 (including $15,000 of unamortized discounts associated with the converted Notes outstanding as of October 10, 2025), respectively, of the discounts recorded in connection with the issuance of the Note have been amortized, resulting to unamortized debt discount of $2,000 and $7,000 as of June 30, 2026 and October 31, 2025, respectively. As of June 30, 2026, the remaining outstanding Notes of $250,000 are convertible into a maximum of 41,667 shares (see Note 21).

 

During the eight months ended June 30, 2026 and the years ended October 31, 2025 and 2024, the Company has paid $0, $20,000 and $64,000 respectively, of interest on the Notes.

 

The securities were offered and sold in a private offering exempt from the registration requirements of the Securities Act, pursuant to the exemptions from registration afforded by Rule 506(b) of Regulation D under the Securities Act.