Note 7. Convertible Notes and Notes Payable

On December 23, 2015, the Company issued a convertible note payable to Chase Mortgage, Inc., not a related party, for $25,000, at an interest rate of 8%, due on December 23, 2018. The note also included 100,000 warrants at an exercise price of $1 per share, which expired on December 23, 2020. The note is convertible at the holder’s discretion into the Company’s common stock at a price of $0.50 per share. The note has matured and is in default, which triggered an increased interest rate of 18%. The accrued interest balance on this note as of December 31, 2025, is $12,003, and the note is recorded under convertible note payable in the liabilities section of the balance sheet. As of December 31, 2025, the note maintains a balance of $25,000.

On April 1, 2016, the Company received $500,000 from Newell Trading Group in exchange for a convertible debenture due April 2, 2017 bearing interest at 10% and convertible into common stock at $0.25 per share unless the note is paid by the Company prior to the election of the holder to convert. The Company recognized a beneficial conversion feature expense of $500,000 that has been fully amortized. On October 3, 2019, Newell Trading Group assigned its rights and interests in its $500,000 convertible debenture to the Sammy Farkas Foundation Inc., (the “Foundation”), a related party. The convertible note payable, net of debt discount of $0 and $0 as of December 31, 2025 and December 31, 2024 of $500,000 and $500,000, respectively was recorded under current liability on the balance sheet and no additional debt discount adjustment is required upon adoption of ASU 2020-06.

The Foundation then entered into an agreement with the Company to extend the maturity date of the convertible debenture to October 10, 2024 in exchange for 54,000 shares of the Company’s stock. The shares have a fair value of $56,700 which was recorded as a debt discount and was being amortized over the life of the extension. On November 11, 2019, The Sammy Farkas Foundation transferred all the rights and interests of the note to another party, 16th Avenue Associates, a non-related party company. The terms remain the same and the transfer has no effect on the financial statements. During the years ended December 31, 2025 and 2024, the Company amortized $0 and $0, respectively of debt discount.

On November 5, 2025, 16th Avenue Associates elected to convert the full outstanding principal balance of $500,000, together with all accrued interest of $480,000, into shares for $0.25 per share. As a result, the convertible note payable to 16th Avenue Associates was reduced to $0 as of December 31, 2025. No gain or loss was recorded due to the conversion. The conversion was recorded as an increase to additional paid-in capital and a corresponding elimination of the convertible note payable and related accrued interest. As of the date of this report, this note has been fully settled through conversion.

Schedule of Convertible Note Payable - Long Term

The details of convertible notes payable, including accrued interest as of December 31, 2025, were as follows:

The following non-related party convertible notes accrued interest for the years ended December 31, 2025 and 2024:

Year ended December 31, 2025:

● Chase Mortgage, Inc.: $6,500

● 16th Avenue Associates: $46,986

● Total Recognized Interest Expense: $53,486

Year ended December 31, 2024:

● Chase Mortgage, Inc.: $5,521

● 16th Avenue Associates: $50,137

● Total Recognized Interest Expense: $55,658