| Related Party Transactions |
12. Related
Party Transactions
| | ● | During the third quarter of Fiscal Year 2015, Mr. Folkson began accruing a consulting fee of $6,000 per month which the aggregate of $36,000 is reflected in professional fees for the six months ended December 31, 2023 and 2022. At December 31, 2023 and June 30, 2023 Mr. Folkson was owed $63,000 and $33,000 in unpaid consulting fees which amounts are included on the balance sheets in accounts payable and accrued liabilities- related party. On February 2, 2024 effective December 1, 2023, Mr. Folkson entered into a new compensation agreement as further disclosed in Note 13 - Subsequent events. |
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On January 20, 2023, the Company entered into the Lock-Up
Agreement with Mr. Folkson. For purposes of the Lock-Up Agreement, Mr. Folkson is the direct or indirect owner of 16,776,591 shares
of the Company’s common stock (the “Shares”), and Mr. Folkson has agreed to not transfer, sell, or otherwise dispose
of any Shares through February 4, 2023. The Lock-Up Agreement is substantially similar to, and serves as an extension of, the lock-up
agreement previously in place between the Company and Mr. Folkson, which expired in accordance with its terms on February 4, 2022. |
The Lock-Up Agreement further provides, in exchange for the agreement to lock up the Shares, that Mr. Folkson shall receive warrants to acquire 400,000 shares of Company Common Stock at an exercise price of $0.30 per share, which warrants carry a twelve-month term and a cashless provision, and will expire if not exercised within the twelve-month term.
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Folkson
Loan On February 7, 2023, Sean Folkson, the Chairman and CEO of the Company, loaned $40,000 to the Company, which was evidenced
by a promissory note (the “Folkson Note”). The maturity date under the Folkson Note is February 7, 2024. The Folkson
Note bears interest at a fixed rate of 12.0% per annum, and shall be payable on the maturity date. Notwithstanding the foregoing,
the Company shall not make any payment to Mr. Folkson under the Folkson Note, whether of principal or interest, and whether or not on
the maturity date when due and payable, unless and until all indebtedness of the Company owed or owing to each of Mast Hill, Puritan
Partners and Verition has been repaid in full. The Folkson Note has customary events of default. |
Mr. Folkson was owed $44,276 and $41,876 as of December 31, 2023 and June 30, 2023, respectively, which amounts are included on the balance sheets in accounts payable and accrued liabilities- related party.
The Company used the proceeds from the Folkson Note for working capital.
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In
addition, at December 31, 2023 and June 30, 2023, respectively, there was $53,625 and $27,000 in unpaid directors fees which
amounts are included on the balance sheets under accounts payable and accrued liabilities- related party. |
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