Note 4 - Related Party Transactions

Related Parties

Related parties with whom the Company had transactions are:


Related Parties		Relationship

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

TheraCour Pharma, Inc. ("TheraCour")		An entity owned and controlled by Dr. Anil Diwan


	For the three months ended				For the six months ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019
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	$	—	$	—	$	2,560	$	4,139


	As of
	December 31,		June 30,
	2020		2020
Account Payable – Related Party

Pursuant to an Exclusive License Agreement with TheraCour, the Company was granted exclusive licenses for technologies developed by TheraCour for the virus types: HIV, HCV, Herpes, Asian (bird) flu, Influenza and rabies. On November 1, 2019, the Company entered into the VZV Licensing Agreement with TheraCour. In consideration for obtaining these exclusive licenses, we agreed: (1) that TheraCour can charge its costs (direct and indirect) plus no more than 30% of certain 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 and; (4) to pay an advance payment equal to twice the amount of the previous months invoice to be applied as a prepayment towards expenses. On October 2, 2018, the Company agreed to enter into an agreement with TheraCour for a waiver of two months worth of prepaid balance in advance of anticipated invoicing, due under prior agreements until the filing of an IND and the application of the then 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. Accounts payable due TheraCour at December 31, 2020 was $619,904 which was offset by a two month advance (see above) of $491,000. There was no advance at June 30, 2020.	$	128,904	$	561,580


	For the three months ended				For the six months ended
	December 31,		December 31,		December 31,		December 31,
	2020		2019		2020		2019
Research and Development Costs Paid to Related Party

Development fees and other costs charged by TheraCour pursuant to the 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, 2020 and June 30, 2020	$	606,742	$	543,108	$	1,255,066	$	1,119,315

Mortgage Note Payable - Related Party

On December 16, 2019, the Company entered into an Open End Mortgage Note (the “Note”) with Dr. Anil Diwan, the Company’s founder, Chairman, President and CEO, to loan the Company up to $2,000,000 in two tranches of $1,000,000 (the “Loan”). The Note was paid off on December 31, 2020. The Note bore interest at the rate of 12% per annum and was secured by a mortgage granted against the Company’s headquarters. Dr. Anil Diwan received 10,000 shares of the Company’s Series A preferred stock as a loan origination fee which was amortized over the one year term of the loan using the 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. Amortization expense on the loan origination fee for the three and six months ended December 31, 2020 was $8,188 and $18,013, respectively, and $1,638 for both the three and six months ended December 31, 2019. The Company had drawn down $1.1 million of this loan. Interest was payable only on the amount drawn down. The lender had escrowed $132,000 of interest payable pursuant to the Loan. For the three and six months ended December 31, 2020, the Company incurred interest expense of $29,040 and $62,773, respectively, and $2,493 for both the three and six months ended December 31, 2019, which reduced the interest escrow balance included in prepaid expenses.