NOTE 11 - NOTES PAYABLE-RELATED PARTIES

As of June 30, 2025 and December 31, 2024, the Company had advances from Kent Emry (Chairman of the Company). The balance outstanding as of June 30, 2025 and December 31, 2024 was $1,500.

On January 22, 2013, the Company issued an unsecured promissory note payable to Kent Emry (Chairman of the Board) for $200,000 due January 1, 2018, with a stated interest rate of 12% per annum beginning three months from issuance, payable monthly. Principal payments were due starting February 1, 2015 at $6,650 per month. The lender has an option to convert the note to licensing rights for the State of Oregon. The Company currently is in default of the principal and interest. The balance outstanding as of June 30, 2025 and December 31, 2024 was $163,610.

On September 9, 2021, the Company issued an unsecured promissory note payable to Kent Emry for $500,000 with principal and interest due June 8, 2022, with a stated interest rate of 25% per annum. The balance outstanding as of June 30, 2025 and December 31, 2024 is $500,000. The interest expense during the three months ended June 30, 2025 and 2024 were $31,164. The interest expense during the six months ended June 30, 2025 and 2024 were $61,986 and $62,328, respectively. If the Company fails to make any payment due under the terms of the promissory note, the Company shall issue a warrant to Kent Emry to which the number of common shares that Kent Emry has the right to purchase equals 119,617 common shares. The warrant shall have a term of three years with an exercise price of $4.14 and shall be equitably adjusted to offset the effect of any stock splits and similar events. On June 8, 2022, the Company issued the warrant that entitles Kent Emry to purchase 119,617 common shares due to the loan default. The fair value of the warrant on June 8, 2022 was $214,975, which the Company recognized as interest expense - related party.

Since September 2022, the Company had received an aggregate of $1,479,026 advances from Louis C Lucido, a member of the Company’s Board of Directors. On August 29, 2023, the Company issued an unsecured promissory note payable to Louis C Lucido for $150,000 with principal and interest due August 29, 2024, with a stated interest rate of 8% per annum. The promissory note, together with all accrued interest, shall be converted into common shares at a conversion price of $2.00 per share on or before August 29, 2024. The interest expense during the three months ended June 30, 2025 and 2024 was $0 and $789, respectively. The interest expense during the six months ended June 30, 2025 and 2024 was $0 and $3,781, respectively. In connection with the issuance of the promissory note, the Company issued the warrant that entitles Mr. Lucido to purchase 150,000 common shares. The warrant shall have a term of three years with an exercise price of $2.00 and shall be equitably adjusted to offset the effect of any stock splits and similar events. The Company allocated the proceeds based on the relative fair value of the debt and the warrants, resulting in the recognition of $87,724 of debt discount on such promissory note. As additional consideration for the debt, the Company issued 18,000 shares of common stock valued at $29,340, which was also recognized as debt discount. During the three months ended June 30, 2025 and 2024, the Company amortized $0 and $48,110 of debt discount as interest expense. During the six months ended June 30, 2025 and 2024, the Company amortized $0 and $77,295 of debt discount as interest expense. On April 24, 2024, the Company entered into an Exchange Agreement (the “Louis 2024 Exchange Agreement”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $150,000 and the related party advances of $296,426 and the accrued interest on the promissory note of $7,858 and director fees of $90,000 into the Company’s 460,477 shares of common stock at a price of $1.18 per share based on the underlying market value of the common stock at the date of issuance. On October 14, 2024, the Company entered into an Exchange Agreement (the “Louis 2024 Q4 Exchange Agreement”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the related party advances of $357,600 and director fees of $30,000 into the Company’s 1,105,218 shares of common stock at $0.35 per share.

Since 2025, the Company had received an aggregate of $812,500 advances from Mr. Lucido. On January 21, 2025, the Company entered into an Exchange Agreement (the “Louis 2025 Exchange Agreement#1”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $725,000 into the Company’s 1,770,452 shares of common stock at $0.41 per share. On March 31, 2025, the Company entered into an Exchange Agreement (the “Louis 2025 Exchange Agreement#2”) with Mr. Lucido, pursuant to which Mr. Lucido agreed to exchange of the promissory note then outstanding of $200,000 into the Company’s 585,394 shares of common stock at $0.34 per share. As of June 30, 2025 and December 31, 2024, the outstanding balance of advances from Mr. Lucido was $112,500 and 225,000, respectively. As of June 30, 2025 and December 31, 2024, the outstanding balance of promissory notes issued to Mr. Lucido was $0. During the three months ended June 30, 2025, the Company also recognized imputed interest of $1,475 for advances from Mr. Lucido based on an imputed interest of 10% per annum. During the six months ended June 30, 2025, the Company also recognized imputed interest of $6,729 for advances from Mr. Lucido based on an imputed interest of 10% per annum.

As of June 30, 2025 and December 31, 2024, the Company owed $330,949 and $302,749 advances to Lourdes Felix, respectively. During the three months ended June 30, 2025, the Company also recognized imputed interest of $8,245 for advances from Lourdes Felix based on an imputed interest of 10% per annum. During the six months ended June 30, 2025, the Company also recognized imputed interest of $12,085 for advances from Lourdes Felix based on an imputed interest of 10% per annum.

The interest expense – related parties during the three months ended June 30, 2025 and 2024 were $164,371 and $203,549, respectively, which includes the amortization of royalty obligations as interest expense of $118,554 (see Note 13). The interest expense – related parties during the six months ended June 30, 2025 and 2024 were $324,499 and $390,377, respectively, which includes the amortization of royalty obligations as interest expense of $233,888 and $237,108, respectively (see Note 13). As of June 30, 2025 and December 31, 2024, the accumulated interest on related parties notes payable was $691,820 and $620,023, respectively, and was included in accounts payable and accrued expenses on the balance sheet.

The outstanding notes payables to related parties as of June 30, 2025 and December 31, 2024 were summarized as below: