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 R. Diwan

Milton Boniuk, MD		Director (retired July 10, 2018) and former significant stockholder

Property and Equipment


	For the Year Ended
	June 30, 2020		June 30, 2019		June 30, 2018
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	$	8,638	$	23,666	$	30,321

Accounts Payable- Related Party

Research and Development Costs Paid to Related Party


	For the Year Ended
	June 30,		June 30,		June 30,
	2020		2019		2018
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 June 30, 2020, 2019 and 2018	$	2,158,034	$	3,119,863	$	3,176,977

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 bears interest at the rate of 12% per annum and is 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 recorded as a dept discount and 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 for the year ended June 30, 2020 was $21,288. As of June 30, 2020, 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 had escrowed $132,000 of interest payable pursuant to the Loan. The balance at June 30, 2020 of the prepaid interest escrowed by the lender is $62,773 and is included in prepaid expenses. For the year ended June 30, 2020, the Company incurred interest expense of $69,227, which reduced the interest escrow balance included in prepaid expenses. On April 30, 2020, the Company and Dr. Diwan mutually agreed to extend the maturity date of the note at the Company’s option, to May 15, 2021, with the rest of the terms remaining the same.

At June 30, 2020, mortgage note payable – related party consisted of:


Mortgage note payable	$	1,100,000
Less: unamortized loan origination fee		(18,013)
Net mortgage note payable	$	1,081,987

Debenture Interest Payable to a Director

Coupon interest expense on the $5,000,000 Series C Debenture paid to Milton Boniuk IRA for the years ended June 30, 2020, 2019 and 2018 was $0, $0, and $185,274, respectively. The Series C Debenture was redeemed effective November 13, 2017. (See Note 7).

June 30, 2020

June 30, 2019

Pursuant to an Exclusive License Agreement we entered into 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. 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 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 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