CONVERTIBLE NOTE AGREEMENTS

9 Months Ended

Sep. 30, 2025

NOTE 6 – CONVERTIBLE NOTE AGREEMENTS

On April 25, 2023, the Company entered into Securities Purchase Agreement (“SPA1”) with a third party to obtain bridge financing. Pursuant to SPA1 , the Company entered into an unsecured 9-month convertible promissory note with a principal amount of $220,000. The Company paid additional consideration of 50,000 restricted shares of common stock and a detachable warrant to purchase up to 200,000 shares of common stock at an exercise price of $5.00 per warrant. The Company previously recognized at issuance an original issue discount (“OID”) of $82,500, which included $20,000 discount and $62,500 additional OID related to the fair value of restricted stock awarded as an additional inducement to the noteholder. Additionally, the Company recorded total accrued interest of $75,778, which included an additional interest charge of $22,000 at the time of issuance and default penalty interest of $53,778 as a result of not paying in accordance with the terms and conditions of SPA1. As of September 30, 2025, unpaid principal and interest of $218,888 may be converted by the noteholder into shares of the Company’s common stock at a conversion price of $0.50 per share at any time while SPA1 remains outstanding. As of September 30, 2025 SPA1 was in default.

On September 29, 2025, the Company entered into Securities Purchase Agreement (“SPA2”) with ClearThink to obtain bridge financing. Pursuant to SPA2, the Company entered into an unsecured 9-month convertible promissory note with a principal amount of $30,000, of which $5,000 is original issue discount and an additional one time interest charge of $4,500 at the time of issuance. SPA2 matures on June 30, 2026, and a lumpsum payment of $34,500 is due and payable. A default penalty equal to 125% of the unpaid balance may be assessed in the event the Company fails to pay the debt upon maturity, secured debt exceeding $500,000 and/or inability for the noteholder to convert the unpaid balance into common stock.

Convertible Notes were classified as current and were comprised as follows:

Schedule of convertible note
	SEPTEMBER 30,			DECEMBER 31,
	2025			2024
	(Unaudited)
Convertible Note, dated April 25, 2023, fixed installments of $26,889, matured in June 2024 and currently in default (1)	$	133,894		$	133,894
Convertible Note, dated September 29, 2025, lumpsum payment of $30,000, inclusive of $5,000 original issue discount, due and payable on June 30, 2026 (2)		30,000			-
Total Convertible Notes		163,894			133,894
Deduct: Unamortized Original Issue Discount ⁽³⁾		(5,000	)		-
Convertible Note principal balance payable		158,894			165,610
Add: Convertible Notes interest payable (3)(4)		80,277			75,777
Total Convertible Notes payable	$	239,171		$	209,671

Total Convertible Notes payable at maturity	$	253,388		$	218,888

(1)

SPA1 required a fixed monthly repayment of approximately $26,889 starting July 24, 2023, and ending on March 24, 2024. On January 29, 2024, the Company decreased the conversion price from $1.50 to $0.50. The Company and the note holder agreed to decrease the conversion ratio to compensate for the debt default position. The conversion ratio modification did not substantively change the cash flows associated with the original Convertible Note; however, the modification resulted in a substantive change in the conversion feature. There were no other modifications made to the Convertible Note. On February 3, 2024, the note holder converted $50,000 in outstanding principal into 100,000 shares of common stock.

(2)

SPA2 is payable upon maturity on June 30, 2026. Unpaid principal and interest of $34,500 may be converted by the noteholder into shares of the Company’s common stock at a conversion price of the lesser or $0.20 or a 25% discount to the lowest closing stock price for the preceding five trading day period. As of September 30, 2025, the lowest conversion rate was $0.08 per share.

(3)	SPA2 assessed an original issue discount of $5,000 and additional 15% interest on the $30,000 face value of SPA2 upon issuance which increased the total amount due from $30,000 to $34,500.

(4)

SPA1 assessed an additional 10% interest on the face value of SPA1 upon issuance which increased the amount due from $220,000 to $242,000. Pursuant to Section 2(a)(i) of the Convertible Note Agreement, failure to pay the noteholder amounts when due constitutes an event of default and recognition of a penalty equal to 125% of the unpaid principal and interest due to the note holder. As of September 30, 2025 and December 31, 2024, unpaid accrued interest payable included $22,000 of interest since issuance of the Convertible Note and penalty interest of $53,778. The note holder has not made any demand for payment.

SPECIFICITY, INC. 10-Q