Note 5. Short-Term Notes Payable

On March 13, 2025, we issued a $3.0 million promissory note (the “Note”) to a single investor at an original issue discount of 17%. Net proceeds to us were $2.25 million after placement agent fees of $175,000 and legal expenses of $98,437.

No interest accrues on the Note unless an event of default occurs, at which time interest will accrue at a rate of 20% per annum. The Note matures upon the earlier of July 14, 2025 or the closing of any subsequent offering by us with net proceeds equal to or in excess of all amounts due under the Note.

The Note contains certain Events of Default, including (i) our failure to pay any amount of principal, interest, redemption price or other amounts due under the Note or any other transaction document, (ii) any default under, redemption of, or acceleration prior to maturity of any indebtedness, as such term is defined in the transaction documents, (iii) bankruptcy, (iv) a final judgement or judgements for the payment of money in excess of $250,000 which is not discharged or stayed pending appeal within 60 days, and (v) any breach or failure to comply with any provision of the Note or any other transaction document.

In connection with the issuance of the Note, we designated and issued 1,000,000 shares of our authorized but unissued shares of preferred stock as Series G Mirroring preferred stock. For a description of the principal terms of the Series G Mirroring preferred stock, see Note 8.

We intend to use the net proceeds from the Note for working capital and other general corporate purposes.

Short-term notes payable consisted of the following:

Summary of Short-Term Notes Payable