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CONVERTIBLE DEBENTURE

3 Months Ended

Mar. 31, 2025

NOTE 7 – CONVERTIBLE DEBENTURE

On February 13, 2025, the Company entered into a Securities Purchase Agreement (the “PIPE Purchase Agreement”) with an institutional investor (the “Investor”), pursuant to which the Company sold in a private placement senior convertible debenture (the “Debenture”) due the earlier of (i) the date that is the 30-day anniversary of the effective date of stockholder approval of the issuance of the shares of common stock upon the conversion of the debentures and (ii) November 13, 2025 (the date that is nine months following the date of issuance of the Debenture) (“Maturity Date”), having an aggregate principal amount (the “Principal Amount”) of $500,000 (the “Debenture Transaction”). The closing of the Debenture Transaction occurred on February 14, 2025.

On March 26, 2025, the Company amended and restated the Debenture (the “A&R Debenture”) to increase the Principal Amount to $1,300,000 to provide for the funding by the Investor to ENvue (i) an aggregate of $250,000 by the Investor to ENvue on February 6, 2025, (ii) an aggregate of $250,000 by the Investor to ENvue on March 4, 2025, and (iii) and an aggregate of $300,000 by the Investor to ENvue on March 26, 2025.

On the Maturity Date, the Company shall pay the Investor in cash or, at the option of the Investor, in the form of conversion shares, or a combination thereof, the entire outstanding Principal Amount of the A&R Debenture, together with accrued and unpaid interest thereon, the applicable exit fee and any other amounts due thereunder. Following the receipt of Debenture Stockholder Approval, the A&R Debenture shall be convertible, in whole or in part, into shares of common stock, at the option of the Investor, at the initial conversion price of $4.8906 (the “Conversion Price”), which is subject to customary anti-dilution adjustments, and which such Conversion Price shall not be lower than the floor price of $0.97812. The A&R Debenture bears interest at the rate of 8.0% per annum, payable on the Maturity Date.

The issuance of the Debenture and the A&R Debenture was made in reliance on an exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Regulation D promulgated thereunder for transactions not involving a public offering.

Due to certain embedded features within the A&R Debenture, the Company elected to account for the A&R Debenture and all the embedded features at fair value at inception. Subsequent changes in fair value are recorded as a component of non-operating income (loss) in the consolidated statements of operations. As a result of electing the fair value option, direct costs and fees related to the Debenture were expensed as incurred.

For the three months ended March 31, 2025, and 2024, the Company recorded a gain of $58,234 and $0, respectively, related to the change in fair value of the A&R Debenture which was recognized in other income (expense) in the consolidated statements of operations. Interest expense on the A&R Debenture totaled $13,289 and $0 for the three months ended March 31, 2025, and 2024, respectively, and is included within change in fair value of the debenture in the consolidated statement of operations.

The following table presents the change in the balance of the A&R Debenture for periods identified:

SCHEDULE OF A&R DEBENTURE

	Three Months Ended March 31, 2025
Balance, beginning of period	$	-
Debenture issued		1,313,097
Change in fair value of A&R Debenture		(58,234	)
Balance, end of period		1,254,863

ENvue Consolidated Secured Note

On January 17, 2025, ENvue issued a Consolidated Secured Note (as amended, the “ENvue Note”) in the aggregate principal amount of $2,497,308, to Alpha Capital Anstalt, which such ENvue Note was funded in several tranches. The ENvue Note does not bear interest and is secured by Collateral (as defined in the ENvue Note). The aggregate principal amount owed under the ENvue Note shall be due and payable on the earlier of (i) the receipt of shareholder approval by the Company of the Parent Stockholder Matters (as defined in that certain Merger Agreement) and (ii) December 31, 2025.