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


	For the three months ended
	September 30,		September 30,
Property and Equipment	2020		2019
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	$	—


	As of
	September 30,		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 September 30, 2020 was $928,818 which was offset by a two month advance (see above) of $491,000.	$	437,818	$	561,580


	For the three months ended
	September 30,		September 30,
	2020		2019
Research and Development Costs Paid to Related Party

Development fees and other costs charged by and paid to TheraCour pursuant to 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 September 30, 2020 and June 30, 2020.	$	648,324	$	576,207

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 debt 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. Amortization expense on the loan origination fee for the three months ended September 30, 2020 was $9,825. As of September 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 September 30, 2020 of the prepaid interest escrowed by the lender is $29,040 and is included in prepaid expenses. For the three months ended September 30, 2020, the Company incurred interest expense of $33,733, 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 September 30, 2020, mortgage note payable – related party consisted of:


Mortgage note payable	$	1,100,000
Less: unamortized loan origination fee		(8,188)
Net mortgage note payable	$	1,091,812