Quarterly report [Sections 13 or 15(d)]

CONVERTIBLE PROMISSORY DEBENTURES

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CONVERTIBLE PROMISSORY DEBENTURES
9 Months Ended
Sep. 30, 2025
Debt Disclosure [Abstract]  
CONVERTIBLE PROMISSORY DEBENTURES

NOTE 5 – CONVERTIBLE PROMISSORY DEBENTURES

 

Convertible notes payable consisted of the following:

 

Note Holder/Original Issuance Date   Maturity Date   Cash
Received
    Outstanding
Balance as of
September 30, 2025
    Outstanding
Balance as of
December 31, 2024
 
Osher Capital Partners LLC                            
January 28, 2020 (“Note 1”)   December 31, 2027   $ 350,005     $ 834,771     $ 620,553  
June 22, 2022 (“Note 2”)   December 31, 2027     75,000       139,559       103,745  
August 31, 2022 (“Note 2”)   December 31, 2027     100,000       182,302       135,520  
September 20, 2022 (“Note 2”)   December 31, 2027     100,000       182,302       135,520  
October 20, 2022 (“Note 2”)   December 31, 2027     100,000       178,670       127,000  
November 14, 2022 (“Note 2”)   December 31, 2027     50,000       90,531       64,350  
December 22, 2022 (“Note 2”)   December 31, 2027     100,000       175,856       125,000  
July 18, 2023 (“Note 3”)   December 31, 2027     60,000       97,662       72,600  
December 7, 2023 (“Note 3”)   December 31, 2027     40,000       65,108       48,400  
May 13, 2024 (“Note 4”)   December 31, 2027     35,000       55,584       40,000  
August 19, 2024 (“Note 4”)   December 31, 2027     7,500       11,139       8,250  
November 19, 2024 (“Note 4”)   December 31, 2027     8,000       11,556       8,800  
April 15, 2025   December 31, 2027     20,000       27,570       -  
                             
Brio Capital Master Fund, Ltd.                            
March 23, 2022 (“Note 2”)   December 31, 2027     100,000       192,311       142,960  
November 9, 2022 (“Note 2”)   December 31, 2027     75,000       136,727       101,640  
January 20, 2023 (“Note 3”)   December 31, 2027     50,000       87,928       62,500  
February 9, 2023 (“Note 3”)   December 31, 2027     50,000       87,928       62,500  
July 20, 2023 (“Note 3”)   December 31, 2027     40,000       65,108       48,400  
January 8, 2024 (“Note 4”)   December 31, 2027     40,000       63,402       44,000  
May 13, 2024 (“Note 4”)   December 31, 2027     35,000       55,584       40,000  
August 20, 2024 (“Note 4”)   December 31, 2027     11,500       17,074       12,650  
November 19, 2024 (“Note 4”)   December 31, 2027     8,000       11,556       8,800  
April 23, 2025   December 31, 2027     10,000       13,748       -  
July 21, 2025   July 21, 2026    

5,000

     

5,500

         
                             
Various third-party noteholders                            
Various dates in fiscal 2024 (“Note 4”)   November 19, 2025     8,000       8,800       8,800  
Various dates in fiscal 2025 (“Note 5”)   Due on various dates from April 15, 2026 through September 12, 2026     334,500       371,800       -  
FY 2025 Regulation D   Primarily January 9, 2026     345,197       379,717       -  
Total convertible notes payable       $ 2,157,702     $ 3,549,793     $ 2,021,988  
Original issue discount                 (753,298 )     (117,868 )
Debt discount                 (286,981 )     (12,384 )
                             
Total convertible notes payable               $ 2,509,514     $ 1,891,736  

 

 

Principal payments on convertible promissory debentures are due as follows:

 

Year ending December 31,      
2025 (excluding the nine months ended September 30, 2025)   $ 8,800  
2026     757,018  
2027     2,783,975  
Long-Term Debt   $ 3,549,793  

 

Changes in convertible notes were as follows:

 

    Note 1     Note 2     Note 3     Note 4     Reg D     Note 5     Totals  
Convertible notes payable as of December 31, 2023   $ 864,136     $ 1,379,500     $ 264,000     $ -     $ -     $ -     $ 2,507,636  
                                                         
Convertible notes payable issued in 2024     56,416       97,655       30,400       879,029       -       -       1,063,500  
Conversion of debt for common stock     (299,999 )     (541,419 )     -       (707,730 )     -       -       (1,549,148 )
Convertible notes payable as of December 31, 2024   $ 620,553     $ 935,736     $ 294,400     $ 171,299     $ -     $ -     $ 2,021,988  
                                                         
Convertible notes payable issued in 2025     -       -       -       -       379,717       410,300       790,017  
Extension of convertible notes payable     214,218       342,522       109,334       63,396       -       8,318       737,788  
Convertible notes payable as of September 30, 2025   $ 834,771     $ 1,278,258     $ 403,734     $ 234,695     $ 379,717     $ 418,618     $ 3,549,793  

 

Changes in note discounts were as follows:

 

    Note 1     Note 2     Note 3     Note 4     Reg D     Note 5     Totals  
Note discounts as of December 31, 2023   $ 114,995     $ 100,810     $ 81,532     $ -     $ -     $ -     $ 297,337  
                                                         
Note discounts issued in conjunction with debt in 2024     56,414       97,657       30,400       487,771       -               672,242  
2024 accretion of note discounts     (129,214 )     (145,792 )     (95,981 )     (468,340 )     -               (839,327 )
Note discounts as of Dec 31, 2024   $ 42,195     $ 52,675     $ 15,951     $ 19,431     $ -     $ -     $ 130,252  
                                                         
Note discounts issued in conjunction with debt in 2025     214,219       342,522       109,334       63,395       165,500       332,825       1,227,795  
2025 accretion of note discounts     (50,783 )     (65,545 )     (20,059 )     (19,790 )     (113,776 )     (47,815 )     (317,768 )
Note discounts as of September 30, 2025   $ 205,631     $ 329,652     $ 105,226     $ 63,036     $ 51,724     $ 285,010     $ 1,040,279  
                                                         
Convertible notes payable, net, as of Dec 31, 2024   $ 578,358     $ 883,061     $ 278,449     $ 151,868     $ -     $ -     $ 1,891,736  
Convertible notes payable, net, as of September 30, 2025   $ 629,140     $ 948,606     $ 298,508     $ 171,659     $ 327,993     $ 133,608     $ 2,509,514  
                                                         
2024 Effective interest rate     21 %     16 %     33 %     273 %     -%       -%       42 %
2025 Effective interest rate     6 %     5 %     5 %     8 %     30 %     11 %     9 %

 

Current Noteholders

 

Extension of Notes

 

On August 29, 2025, noteholders Osher and Brio agreed to extend all of their outstanding notes to December 31, 2027 for original issue discount totaling $737,786. ASC 470-50-40-10, Modifications and Extinguishments, provides guidance on whether a modification or exchange of a term loan or debt security should be accounted for as a modification or an extinguishment. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different and deemed to be a modification of the debt instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is greater than 10 percent, the debt instruments are considered to be substantially different and deemed to be an extinguishment of the debt instrument. The Company accounted for the extension of the notes as a modification with no gain or loss recognized since there were no notes where the cash flow effect on present value basis was greater than 10%.

 

 

Regulation D

 

On January 9, 2025, the Company initiated a Regulation D offering to sell up to 750,000 Units at a price of $5,000 per unit with each Unit consisting of one (1) $5,500 principal amount convertible debenture (convertible at two dollars ($2.00) per share into the Company’s common stock) and a Warrant to purchase 1,250 shares of common stock at $4.00 per share. The Debentures have a principal amount equal to 110% of such Purchaser’s subscription amount, convertible at $2.00 per share and maturing one (1) year from the date the subscription amount is accepted by the Company. The Warrants for a number of shares equal to the subscription amount divided by the conversion price with an exercise price of $4.00 per share, exercisable upon issuance and will expire five years from issuance. The Debentures will not be redeemable but contain an automatic conversion feature, which will cause all principal and interest due under the Debenture to automatically convert if our common stock is listed for trading on a national securities exchange, such as NASDAQ or the NYSE. As of September 30, 2025, a total of 69 Units were sold to accredited investors at a price of $5,500 per Unit totaling $379,717 (total of $345,197 cash was received).

 

2025 Convertible Notes (Note 5)

 

During fiscal 2025, the Company entered into Original Issue Discount Senior Convertible Debentures (the “2025 Notes”) totaling (i) $178,200 aggregate principal amount of Notes (total of $162,000 cash was received) due between April and June 2026 based on $1.00 for each $0.90909 paid by the noteholders and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 80,851 shares of the Company’s Common Stock at an exercise price of $4.00 per share. The aggregate cash subscription amount received by the Company for the issuance of the Note and Warrants was $178,200 which was issued at a $16,200 original issue discount from the face value of the Note. The conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $2.00 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.

 

In addition, in August and September 2025, the Company entered into two Notes totaling $232,100 (total of $207,500 cash was received) that provide for a variable conversion price. The Notes provide for a variable conversion rate per share equal to 65% and 75%, respectively, of the lowest trading price for the proceeding 10 trading days prior to a conversion, are due in one year and provide for interest of 7% to 8% per annum. The Company determined that in accordance with ASC 815-15, Embedded Derivatives, it should bifurcate and separately recognize the variable conversion rate at its fair value and at each subsequent measurement date, remeasure its fair value with such changes in fair value recorded in earnings. The Company recognized a total value of $181,362 as a derivative on the grant dates (based on the Binomial valuation model on the date of grant). During the three and nine months ended September 30, 2025 and 2024, the Company did not recognize a remeasurement to fair value as it was deemed immaterial. The issuances of the foregoing securities are exempt from registration pursuant to Section 4(a)(2) of the Securities Act promulgated thereunder as the Sellers are sophisticated investors and familiar with the Company’s operations. No stock purchase warrants were issued as part of the agreement.

 

On August 29, 2025, two noteholders agreed to extend their notes to December 31, 2027 for original issue discount totaling $8,316.

 

2024 Convertible Notes (Note 4)

 

During fiscal 2024, the Company entered into Original Issue Discount Senior Convertible Debentures (the “2024 Notes”) totaling (i) $171,300 aggregate principal amount of Notes (total of $153,000 cash was received) due between January and November 2025 based on $1.00 for each $0.90909 paid by the noteholders and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 80,426 shares of the Company’s Common Stock at an exercise price of $4.00 per share. The aggregate cash subscription amount received by the Company for the issuance of the Note and Warrants was $153,000 which was issued at a $18,300 original issue discount from the face value of the Note. The conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $2.00 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.

 

On August 29, 2025, the noteholders agreed to extend the notes to December 31, 2027 for original issue discount totaling $63,395.

 

In September 2024, holders converted $474,794 in exchange for the issuance of 118,700 shares of Common Stock to the holders.

 

In May and June 2024, holders converted $232,937 in exchange for the issuance of 38,826 shares of Common Stock to the holders.

 

 

2023 Convertible Notes (Note 3)

 

During fiscal 2023, the Company entered into Original Issue Discount Senior Convertible Debentures (the “2023 Notes”) totaling (i) $264,400 aggregate principal amount of Notes (total of $240,000 cash was received) due between January and December 2024 based on $1.00 for each $0.90909 paid by the noteholders and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 139,500 shares of the Company’s Common Stock at an exercise price of $4.00 per share. The aggregate cash subscription amount received by the Company for the issuance of the Note and Warrants was $240,000 which was issued at a $24,400 original issue discount from the face value of the Note. The conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $2.00 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.

 

On August 29, 2025, the noteholders agreed to extend the notes to December 31, 2027 for original issue discount totaling $109,334.

 

On September 30, 2024, a noteholder agreed to extend the note to August 31, 2025 for original issue discount totaling $15,400.

 

On April 9, 2024, a noteholder agreed to extend the note to March 31, 2025 for original issue discount totaling $15,000.

 

2022 Convertible Notes (Note 2)

 

During fiscal 2022, the Company entered into Original Issue Discount Senior Convertible Debentures (the “2022 Notes”) totaling (i) $770,000 aggregate principal amount of Notes (total of $700,000 cash was received) due between January and December 2023 based on $1.00 for each $0.90909 paid by the previous noteholder and (ii) five-year Common Stock Purchase Warrants (“Warrants”) to purchase up to an aggregate of 192,500 shares of the Company’s Common Stock at an exercise price of $4.00 per share. The aggregate cash subscription amount received by the Company from the previous noteholder for the issuance of the Note and Warrants was $700,000 which was issued at a $70,000 original issue discount from the face value of the Note. The conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $2.00 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.

 

On August 29, 2025, the noteholders agreed to extend the notes to December 31, 2027 for original issue discount totaling $342,522.

 

On September 30, 2024, a noteholder agreed to extend the note to August 31, 2025 for original issue discount totaling $56,306.

 

On April 10, 2024, a noteholder agreed to extend the notes to March 2025 for original issue discount totaling $41,350. During 2023, the noteholders agreed to extend the notes to between August 2024 and March 2025 for original issue discount totaling $68,078.

 

Osher – $620,553 (Note 1)

 

On January 28, 2020, as subsequently amended, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with respect to the sale and issuance to institutional investor Osher Capital Partners LLC (“Osher”) of (i) $385,000 aggregate principal amount of Original Issue Discount Senior Convertible Debenture due August 30, 2024, based on $1.00 for each $0.90909 paid by Osher and (ii) five-year Common Stock Purchase Warrants to purchase up to an aggregate of 102,827 shares of the Company’s Common Stock at an exercise price of $3.76 per share. The aggregate cash subscription amount received by the Company from Osher for the issuance of the note and warrants was $350,005 with a total of $34,995 original issue discount from the face value of the Note. The conversion price for the principal in connection with voluntary conversions by a holder of the convertible notes is $2.00 per share, subject to adjustment as provided therein, such as stock splits and stock dividends.

 

At various dates from October 2021 through September 2024, the noteholder agreed to extend the note for original issue discount totaling $235,552 which were due August 31, 2025.

 

On August 29, 2025, the noteholder agreed to extend the note to December 31, 2027 for original issue discount totaling $214,219. The note totals $834,771 as of September 30, 2025 and is included in long term convertible notes payable in the unaudited condensed consolidated balance sheets as of September 30, 2025.