Note 6. Related Party Transactions

As of December 31, 2025 and December 31, 2024, the Company had related party accounts payable of $926,659 owed to Michael Farkas, the Company’s Chairman (formerly President and Chief Executive Officer). This amount relates to consulting services provided to the Company from 2015 through 2022, for which payment has not yet been made. The balance is non-interest bearing and does not have fixed repayment terms.

The Company and Mr. Farkas intend to formalize the terms of this obligation. The Company expects to resolve the outstanding balance through one or a combination of cash repayment, conversion to equity, or other mutually agreed arrangements. The timing and structure of such resolution will be determined based on the Company’s capital resources and strategic objectives.

The Company’s Chairman earned $10,000 per month under a consulting agreement effective from October 31, 2023 through August 31, 2025. The Company recorded compensation expense of $80,000 and $120,000 within general and administrative expenses — related parties for the years ended December 31, 2025 and 2024, respectively. As of December 31, 2025 and December 31, 2024, $230,000 and $180,000, respectively, of compensation was unpaid and included in accounts payable — related party on the consolidated balance sheets.

Notes Payable — Related Party

During 2016, 2017, and 2019, Balance Group LLC loaned an aggregate of $66,850 to the Company. On October 3, 2019, the Company received $40,000 from The Sammy Farkas Foundation Inc. (the “Foundation”) in exchange for a promissory note bearing 12% interest per annum. Both the Balance Group LLC notes and the Foundation note were in default prior to their conversion. On November 5, 2025, all of these balances, together with accrued interest, were converted into shares of common stock as part of the comprehensive debt-to-equity conversion described in Note 8.

During 2025, the Company received $500,000 in financing from The Farkas Group, Inc., a related party, consisting of a $250,000 promissory note dated November 3, 2025 and a $250,000 promissory note dated November 11, 2025. Both notes bear interest at 8% per annum and mature six months from the date of issuance. Additionally, the Company received a $18,000 promissory note from Michael Farkas, the Chairman, dated October 14, 2025 bearing an interest rate of 18% per annum maturing twelve months from the date of issuance

 Schedule of Note Payable - Related Party

Convertible Notes Payable — Related Party

On September 30, 2016, Balance Group LLC loaned $120,000 to the Company as a convertible note payable at an interest rate of 10%, due October 1, 2017. On June 27, 2021, the Company received $50,000 from Michael D. Farkas in exchange for a convertible promissory note with a face value of $53,192, bearing 12% interest per annum, due June 27, 2022. Both notes were in default and were converted into shares of common stock on November 5, 2025 as part of the comprehensive debt-to-equity conversion described in Note 8.

 Schedule of Convertible Note Payable - Related Party

Short-Term Advances — Related Party

As of December 31, 2024, the President and companies controlled by the President had loaned the Company a total of $1,731,058 in short-term advances carrying interest rates of 8%, 10%, and 18%, maturing one year and one day from the date of each loan. During 2025, the Company received an additional $84,800 in advances from Michael Farkas consisting of 11 individual notes. On November 5, 2025, $1,797,858 of these advances, together with accrued interest, were converted into shares of common stock. The $18,000 note remains outstanding at December 31, 2025 and is classified as short-term advances — related party on the consolidated balance sheet.

Summary of Related Party Notes and Accrued Interest

The following table summarizes all related party notes, including principal balances and accrued interest as of December 31, 2025:

 Schedule of Related Party Transaction

As of December 31, 2024, prior to the debt-to-equity conversion, related party notes and accrued interest were as follows:

Related Party Interest Expense

The following related party notes recognized interest expense for the years ended December 31, 2025 and 2024:

 Schedule of Related Party Notes Interest

Employment Agreements

On August 22, 2025, the Company entered into an employment agreement with Alan Campbell upon his appointment as Chief Executive Officer. The agreement provides for an annual salary of $350,000 and an initial equity grant of 780,264 shares of common stock representing 3.6% of fully diluted common stock. The shares vest over a three-year period, with one-third vesting on each anniversary of the issuance date, subject to continued service. The total grant-date fair value was $2,184,739, which is being recognized as stock-based compensation expense over the vesting term using the graded vesting method. The agreement also contains an anti-dilution provision that resulted in a derivative liability (see Note 11).

In connection with the debt-to-equity conversion completed on November 5, 2025 (see Note 7 and 8) and other equity issuances, the anti-dilution provision was triggered, resulting in the issuance of an additional 906,420 shares of common stock to Mr. Campbell to maintain his proportional ownership interest. These shares were valued at $1.57 per share (the closing price on the date of issuance), resulting in stock-based compensation expense of $1,423,079. In total, 1,686,684 shares of common stock were issued to Mr. Campbell during the year ended December 31, 2025.

The following table summarizes the expected recognition of stock-based compensation expense related to Mr. Campbell’s equity grant over the vesting term:

Schedule of Recognition of Stock-based Compensation Expense 

During the year ended December 31, 2025, a total of 1,686,684 shares of common stock were issued to Mr. Campbell, consisting of 780,264 shares under the employment agreement and 906,420 shares under the anti-dilution provision. The Company recognized total stock-based compensation expense of $1,902,179 attributable to Mr. Campbell, comprising $479,100 related to the graded vesting of the employment agreement equity grant and $1,423,079 related to the additional shares issued under the anti-dilution provision. As of December 31, 2025, there was $1,705,639 of unrecognized compensation cost related to the equity grant, which is expected to be recognized over a weighted-average period of approximately 2.3 years. All other employment agreements do not have anti-dilutive features.