CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

3 Months Ended

Mar. 31, 2025

Debt Disclosure [Abstract]

CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

NOTE 5 – CONVERTIBLE DEBENTURES, NOTES AND OTHER DEBT

As of March 31, 2025 and December 31, 2024, special purchase agreements (SPAs) with convertible debentures and notes, net of debt discount and including accrued interest, if any, consist of the following amounts:

	March 31, 2025		December 31, 2024
Current Debt
Convertible debentures
10% Convertible note payable, due April 23, 2022 – Bridge Investor	$	35,556	$	35,556
10% Convertible note payable, due April 23, 2022 – Related Party		164,444		164,444
10% Convertible note payable, due August 6, 2022 – Bridge Investor		200,000		200,000
		400,000		400,000
Fall 2019 Notes
5% Convertible note payable – Stephen Boesch		135,208		133,958
5% Convertible note payable – Related Party		316,858		313,733
5% Convertible note payable – Dr. Sanjay Jha (Through his family trust)		316,378		313,253
5% Convertible note payable – CEO & CFO – Related Parties		103,684		102,659
5% Convertible note payable – Bridge Investors		212,422		210,322
		1,084,550		1,073,925
August 2021 Convertible Notes
5% Convertible note – Autotelic Inc– Related Party		295,677		292,552
5% Convertible note – Bridge investors		441,744		437,075
5% Convertible note – CFO – Related Party		88,708		87,770
		826,129		817,397
March 2022 Notes
16% Convertible Notes – Accredited Investors		173,493		233,687
Debt for Clinical Trials – Forever Prosperity ( Formerly GMP)
2% Convertible Notes – Forever Prosperity		4,862,439		4,840,247
May and June 2022 Note
16% Convertible Notes – Accredited Investors		1,013,760		993,130
JH Darbie PPM 2 Debt
16% Convertible Notes - Non-related parties		2,220,483		2,183,638
16% Convertible Notes – CEO – Related Party		125,000		125,000
		2,345,483		2,308,638
Other Debt
Short term debt – Bridge investors		210,000		210,000
Short term debt from CFO – Related Party		86,050		76,050
Short term debt – Autotelic Inc. – Related Party		2,235,000		2,085,000
Short Term Debt from CEO – Related Party		50,000		50,000
		2,581,050		2,421,050
Total of short term convertible debentures & notes and other debt	$	13,286,904		13,088,074

Convertible Debentures

As of March 31, 2025, the Company had a derivative liability of approximately $763,000 and recorded a change in fair value of approximately $60,000 on the Convertible Debentures issued in 2019 to our CEO and a bridge investor.

Bridge Financings

Notes with Officer and Bridge Investor

In April 2019, the Company entered into a Securities Purchase Agreement (the “Bridge SPA”) with our CEO (the “Trieu Note”) and a Bridge Investor with a commitment to purchase convertible notes in the aggregate of $400,000. For more information on the Bridge SPA, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

The issuance of the Trieu Note resulted in a discount from the beneficial conversion feature totaling $131,555 related to the conversion feature. Total amortization of the OID and the discount totaled approximately $0 for the three months ended March 31, 2025 and 2024, respectively. Total unamortized discount on this note was approximately $0 as of March 31, 2025, and December 31, 2024, respectively.

In April 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #1 (“Tranche #1”) with the Bridge Investor. For more information on Tranche #1, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $28,445. Total amortization of the OID and discount totaled approximately $0 for the three months ended March 31, 2025, and 2024, respectively. Total unamortized discount on this note was approximately $0 as of March 31, 2025 and December 31, 2024.

In August 2019, pursuant to the Bridge SPA the Company entered into Convertible Note Tranche #2 (“Tranche #2”) with the Bridge Investor. For more information on Tranche #2, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

The issuance of the note resulted in a discount from the beneficial conversion feature totaling $175,000. Total amortization of the OID and discount totaled approximately $0 for the three months ended March 31, 2025, and 2024, respectively. Total unamortized discount on this note was $0 as of March 31, 2025 and December 31, 2024.

Fall 2019 Debt Financing

In December 2019, the Company closed its Fall 2019 Debt Financing, raising an additional $500,000 bringing the gross proceeds of all debt financings under the Fall 2019 Debt Financing to $1,000,000. The Company entered into those certain Note Purchase Agreements (the “Fall 2019 Note Purchase Agreements”) with certain accredited investors and the officers of the Company for the sale of convertible promissory notes (the “Fall 2019 Notes”). The Company completed the initial closing under the Fall 2019 Note Purchase Agreements in November 2019. The Company issued Fall 2019 Notes in the principal amount of $250,000 to each of Dr. Vuong Trieu, the Company’s Chief Executive Officer, and Stephen Boesch, in exchange for gross proceeds of $500,000. In connection with the second and final closing of the Fall 2019 Debt Financing, the Company issued Fall 2019 Notes to additional investors including $250,000 to Dr. Sanjay Jha, through his family trust, the former CEO of Motorola and COO/President of Qualcomm. The Company also offset certain amounts due to Dr. Vuong Trieu, the Company’s Chief Executive Officer, Chulho Park, the Company’s then Chief Technology Officer, and Amit Shah, the Company’s Chief Financial Officer, all related parties as Officers of the Company, and converted such amounts due into the Fall 2019 Notes. $35,000 due to Dr. Vuong Trieu, $27,000 due to Chulho Park and $20,000 due to Amit Shah were converted into convertible debt under the Fall 2019 Notes. The Company also issued the Fall 2019 Notes of $168,000 to two accredited investors.

All the Fall 2019 Notes provided for interest at the rate of 5% per annum and are unsecured. For more information on the Fall 2019 Debt Financing, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

There was no activity during the three months ended March 31, 2025 and 2024. The total unamortized principal amount of the Fall 2019 Notes was $850,000 as of March 31, 2025, and December 31, 2024.

Further, the Company recorded interest expense of $10,625 on these Fall 2019 Notes for the three months ended March 31, 2025, and 2024, respectively. The total amount outstanding under the Fall 2019 Notes, net of discounts and including accrued interest thereon, as of March 31, 2025, and December 31, 2024, was approximately $1,085,500 and $1,073,900, respectively.

Forever Prosperity (Formerly GMP) Notes

In June 2020, the Company secured $2 million in debt financing, evidenced by a one-year convertible note (the “GMP Note”) from GMP, to conduct a clinical trial evaluating OT-101 against COVID-19 bearing 2% annual interest, and was personally guaranteed by Dr. Vuong Trieu, the Chief Executive Officer of the Company.

In September 2021, the Company secured a further $1.5 million in debt financing, evidenced by a one-year convertible note (the “GMP Note 2”) from GMP, to fund the same clinical trial evaluating OT-101 against COVID- 19 bearing 2% annual interest.

In October 2021, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “October Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million. Further, in January 2022, the Company entered into an Unsecured Convertible Note Purchase Agreement (the “January Purchase Agreement”) with GMP, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $0.5 million.

Between June 2020 and January 2022, the Company entered into four Unsecured Convertible Note Purchase Agreements with Forever Prosperity, for a total amount of $4.5 million. Cumulatively, these four Notes are referred to as the “GMP Notes”. The GMP Notes carry an interest rate of 2% per annum and mature on the earlier of (a) the one- year anniversary of the date of the Purchase Agreement, or (b) the acceleration of the maturity by GMP upon occurrence of an Event of Default (as defined below). All Notes contain a voluntary conversion mechanism whereby GMP may convert the outstanding principal and accrued interest under the terms of all the GMP Notes into shares of Common Stock (the “Conversion Shares”), at the consolidated closing bid price of the Company’s Common Stock on the applicable OTC Market as of the date the Company receives a Notice of Conversion from GMP. Prepayment of the GMP Notes may be made at any time by payment of the outstanding principal amount plus accrued and unpaid interest. As of March 31, 2025, the GMP Notes are in default, however Forever Prosperity has not called for the repayment of the debt. The total principal outstanding on all the GMP notes, inclusive of accrued interest, was approximately $4.9 million and $4.8 million, as of March 31, 2025, and December 31, 2024, respectively.

During the quarters ended March 31, 2025, and 2024, the Company incurred approximately $22,000 and $22,400 of interest expense, respectively, on all the 4 notes. For a more detailed discussion on the Forevery Prosperity Notes, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

August 2021 Notes

In August 2021, the Company entered into Note Purchase Agreements with Autotelic - a related party, our CFO – a related party, and certain accredited investors (the “August 2021 investors”), whereby the Company issued four convertible notes in the aggregate principal amount of $698,500 convertible into shares of common stock of the Company for net proceeds of approximately $691,000. The convertible notes carry a five (5%) percent coupon and mature one year from issuance. The majority of the August 2021 investors have the right, but not the obligation, not more than five days following the maturity date, to convert all, but not less than all, the outstanding and unpaid principal plus accrued interest into the Company’s common stock, at a conversion price of $0.18. The August 2021 Note Holders has waived the default in the maturity of the August 2021 Notes and as such there is no event of default and also agreed to extend the date of maturity of the August 2021 Notes to December 31, 2025. The Company determined that the economic characteristics and risks of the embedded conversion option are not clearly and closely related to the economic characteristics and risks of the debt host instrument. Further, the Company determined that the embedded conversion feature meets the definition of a derivative but met the scope exception to the derivative accounting required under ASC 815 for certain contracts involving a reporting entity’s own equity.

As of March 31, 2025, and December 31, 2024, the August 2021 convertible notes, inclusive of accrued interest, consist of the following amounts:

	March 31,		December 31,
	2025		2024
Autotelic - Related party convertible note, 5% coupon December 2024	$	295,677	$	292,552
CFO - Related party convertible note, 5% coupon December 2024		88,708		87,770
Accredited investors convertible note, 5% coupon December 2024		441,744		437,075
	$	826,129	$	817,397

During the quarters ended March 31, 2025 and 2024, the Company recognized approximately $8,730 of interest expense on the August 2021 Investors notes, of which approximately $4,060 are attributable to related parties.

At March 31, 2025, and December 31, 2024, accrued interests on these convertible notes totaled approximately $128,000 and $119,000, respectively.

November December 2021 and March 2022 Financing

In November / December 2021, the Company entered into securities purchase agreement with five institutional investors, whereby the Company issued five convertible notes in the aggregate principal amount of $1,250,000 convertible into shares of common stock of the Company. As of March 31, 2025, the November- December 2021 notes and any accrued interest, are fully converted. For more information on the November / December 2021 notes, refer to our 2024 Annual Report on Form 10-K filed with the SEC on April 15, 2025.

Further, in March 2022, the Company entered into a Securities Purchase Agreement with Fourth Man, pursuant to which the Company issued convertible promissory note in the aggregate principal amount of $0.25 million, convertible into shares of common stock of the Company. The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. As of December 31, 2022, this note is in default and Fourth Man has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s Common Stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 1,250,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total of 125,000 warrants convertible into an equivalent number of the Company Common Stock at a strike price of $0.20 up to five years after issuance, as part of a finder’s fee agreement.

As of March 31, 2025, and December 31, 2024, the March 2022 Fourth Man convertible note, including accrued interest and net of debt discount, consist of the following amounts:

	March 31, 2025		December 31, 2024
Fourth Man Convertible note, 16% coupon March 2023 inclusive of accrued interest and default provision	$	173,493	$	233,687
Unamortized debt discount		-		-
Convertible notes, net	$	173,493		233,687

In March 2025, the Company converted approximately $32,000 in principal and approximately $37,000 in accrued interest and legal fees into 1,002,832 shares of common stock. The note includes a default amount calculated at 125% of the unpaid principal and accrued interest. As the Company failed to repay the note at the original maturity date, The Company has recorded an estimated default penalty of approximately $70,000.

The Company recognized approximately $8,200 and $8,400 of interest during the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025 and December 31, 2024, the balance of the unamortized debt discount was $0. The Company adopted ASU 2020-06 on January 1, 2023, which resulted in the reversal of the original BCF amount to additional paid in capital for $109,349, reversal of the unamortized debt discount related to the BCF for $25,489 with the balance being recorded through retained earnings for $78,460.

May 2022 Mast Financing

In May 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $605,000 convertible into shares of common stock of the Company (“May 2022 Mast Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. Investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 3,025,000 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total amount of 302,500 as part of a finder’s fee agreement. Portion of the proceeds were be used to retire some of the November/December 2021 notes.

As of March 31, 2025, and December 31, 2024, convertible note under the May 2022 Mast Financing, net of debt discount, consist of the following amounts:

	March 31, 2025		December 31, 2024
Mast Hill Convertible note, 12% coupon May 2025, inclusive of accrued interest and penalty	$	1,013,760	$	993,130
Convertible notes, net	$	1,013,760	$	993,130

Accrued interest was approximately $0.4 million as of March 31, 2025 and December 31, 2024, respectively. The May 2022 Mast Note was extended through May 2025 at a cost of approximately $82 thousand, and which is included in the amount outstanding and payable to Mast as of March 31, 2025.

The Company recognized approximately $0 of interest expense attributable to the amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants during the three months ended March 31, 2025 and 2024, respectively.

Effective January 1, 2023, the Company adopted ASU 2020-06, which resulted in the reversal of the original BCF amount to additional paid in capital for approximately $0.2 million, a reversal of the unamortized debt discount related to the BCF for approximately $0.1 million, with the balance of approximately $0.1 million being recorded through retained earnings.

June 2022 Blue Lake Financing

In June 2022, the Company entered into a securities purchase agreement with one institutional investor, whereby the Company issued one convertible note in the aggregate principal amount of $335,000 convertible into shares of common stock of the Company (“June 2022 Blue Lake Note”). The convertible notes carry a twelve (12%) percent coupon and a default coupon of 16% and mature at the earliest of one year from issuance or upon event of default. The investor has the right at any time following issuance date to convert all or any part of the outstanding and unpaid amount of the note into the Company’s common stock at a conversion price established at a fixed rate of $0.10. The Company granted a total number of 837,500 warrants convertible into an equivalent number of the Company common shares at a strike price of $0.20 up to five years after issuance. The Placement agent was also granted a total of 83,750 warrants convertible into an equivalent number of the Company Common Stock at a strike price of $0.20 up to five years after issuance, as part of a finder’s fee agreement. A portion of the proceeds were used to retire some of the November/December 2021 notes.

In May 2024, Blue Lake converted the balance of their note of approximately $531,000 including principal, accrued interest and default penalty, into 7,605,760 common shares of the Company.

As of March 31, 2025 and December 31, 2024, convertible note under the June 2022 Blue Lake Financing, net of debt discount, consist of the following amounts:

	March 31, 2025		December 31, 2024
Blue Lake Convertible note, 16% coupon June 2023, inclusive of accrued interest and penalty	$	-	$	-
Convertible notes, net	$	-	$	-

The Company recognized approximately $0 and $26,400 of interest expense attributable to interest, amortization of the debt discount from the original debt discount, deferred financing costs, fair value allocated to the warrants and the beneficial conversion feature during the three months ended March 31, 2025 and 2024, respectively.

The Company adopted ASU 2020-06 effective January 1, 2023, which resulted in the reversal of the original BCF amount to additional paid in capital of approximately $0.2 million, reversal of the unamortized debt discount of approximately $0.1 million related to the BCF and the balance of $0.1 million being recorded through retained earnings.

Other short-term advances

As of March 31, 2025 compared to December 31, 2024, other short-term advances consist of the following amounts obtained from various employees and related parties:

Other Advances	March 31, 2025		December 31, 2024
Short term advance from CFO – Related Party	$	86,050	$	76,050
Short term advance from CEO – Related Party		50,000		50,000
Short term advances – bridge investors & others		210,000		210,000
Short term advances – Autotelic Inc. – Related Party		2,235,000		2,085,000
	$	2,581,050	$	2,421,050

As of January 1, 2024, approximately $1.5 million was outstanding and payable to Autotelic. During the year ended December 31, 2024 Autotelic Inc. provided additional short-term funding of approximately $0.6 million to the Company. In the three months ended March 31, 2025 Autotelic Inc. provided additional short-term funding of $150,000 to the Company. As such, approximately $2.2 million was outstanding and payable to Autotelic at March 31, 2025.

As of January 1, 2024, approximately $35,000 was outstanding and payable to the Company’s CFO. During the year ended December 31, 2024, the CFO provided additional short-term funding of $41,000. In the three months ended March 31, 2025, the CFO provided additional short-term funding of $10,000 to the Company. As such, approximately $86,000 was outstanding and payable to the Company’s CFO at March 31, 2025. In December 2023, the Company received $50,000 from the Company’s CEO. As such, $50,000 was outstanding to the Company’s CEO at March 31, 2025. As of March 31, 2025, approximately $210,000 was outstanding as short-term advances from certain bridge investors.