Note 4 - Related Party Transactions

Related Parties

Related parties with whom the Company had transactions are:


Related Parties		Relationship

Anil R. Diwan		Chairman, President, acting CEO, significant stockholder and Director

TheraCour Pharma, Inc.		An entity owned and controlled by a significant stockholder


	As of
	December 31,		June 30,
	2019		2019
Account Payable – Related Party

Pursuant to an Exclusive License Agreement we entered into with TheraCour, the Company was granted exclusive licenses in perpetuity for technologies developed by TheraCour for the virus types: HIV, HCV, Herpes, Asian (bird) flu, Influenza and rabies. In consideration for obtaining this exclusive license, we agreed: (1) that TheraCour can charge its costs (direct and indirect) plus no more than 30% of direct costs as a development fee and such development fees shall be due and payable in periodic installments as billed, (2) we will pay $2,000 or actual costs each month, whichever is higher for other general and administrative expenses incurred by TheraCour on our behalf, (3) to make royalty payments of 15% (calculated as a percentage of net sales of the licensed drugs) to TheraCour; (4) to pay an advance payment equal to twice the amount of the previous month’s invoice to be applied as a prepayment towards expenses. On October 2, 2018, the Company entered into an agreement with TheraCour for a waiver of the two months worth of prepaid balance advance of anticipated invoicing until the filing of an IND and the application of the current advance as a credit against current open invoices. Additionally, TheraCour agreed to defer $25,000 per month of development fees, beginning with July 2018 through December 31, 2019. On December 17, 2019, the Company entered into a Deferred Expense Exchange Agreement with TheraCour, whereby the Company and TheraCour agreed to the exchange of 100,000 shares of Series A preferred stock with a fair value of $392,669 for $250,000 previously deferred development fees owed to TheraCour, and recognized a loss on the exchange of $142,669. Accounts payable due TheraCour on the reporting date was	$	737,370	$	823,783


	For the three months ended				For the six months ended
	December		December		December		December
	31,		31,		31,		31,
	2019		2018		2019		2018
Property and Equipment

During the reporting period, TheraCour acquired property and equipment on behalf of the Company from third party vendors and sold such property and equipment, at cost, to the Company	$	—	$	7,408	$	4,139	$	7,408


	For the three months ended				For the six months ended
	December		December		December		December
	31,		31,		31,		31,
	2019		2018		2019		2018
Research and Development Costs Paid to Related Party

Development fees and other costs charged by TheraCour pursuant to exclusive License Agreements between TheraCour and the Company for the development of the Company’s drug pipeline. No royalties are due TheraCour from the Company at December 31, 2019 and June 30, 2019	$	543,108	$	899,184	$	1,119,315	$	1,745,872

Mortgage Note Payable - Related Party

On December 16, 2019, the Company entered into an Open End Mortgage Note (the "Note") with Anil Diwan, the Company's founder, Chairman and President, to loan the Company up to $2,000,000 in two tranches of $1,000,000 (the "Loan"). The Note bears interest at the rate of 12% per annum and is secured by a mortgage granted against the Company’s headquarters. The unpaid principal balance is due and payable on December 15, 2020. The lender received 10,000 shares of the Company's Series A preferred stock as a loan origination fee which is to be amortized over the one year term of the loan using effective interest method. The fair value of the 10,000 shares of the Company’s Series A preferred stock when issued on December 16, 2019 was $39,301. The Series A preferred stock fair value is based on the greater of the i) the converted value to common at a ratio of 1:3.5; or ii) the value of the voting rights since the Holder would lose the voting rights upon conversion. for the assumptions used in calculating the fair value of the preferred shares. The conversion of the shares is triggered by a Change of Control. See note 7 for inputs used in calculation of fair value. Amortization expense on the loan origination fee was $1,638 for both the three and six months ended December 31, 2019. As of December 31, 2019, the Company has drawn down $1.1 million of this loan and may, at its option, draw down the remainder of the loan. Interest is payable only on the amount drawn down. The lender has escrowed $132,000 of interest payable pursuant to the Loan. For both the three and six months ended December 31, 2019, the Company incurred interest expense of $2,493 which reduced the interest escrow balance included in prepaid expenses.

At December 31, 2019, mortgage note payable – related party consisted of:


Mortgage note payable	$	1,100,000
Less: unamortized loan origination fee		(37,663)
	$	1,062,337