CONVERTIBLE PROMISSORY NOTES |
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Convertible Promissory Notes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONVERTIBLE PROMISSORY NOTES | 8. CONVERTIBLE PROMISSORY NOTES
As of September 30, 2024 and December 31, 2023, the Company had a total of $1,628,000 and $1,490,930, respectively, of outstanding convertible notes payable, which consisted of the following:
Included in Convertible Notes - with fixed conversion terms, are loans provided to the Company from various investors. These notes carry simple interest rates ranging from 0% to 14% per annum and with terms ranging from 1 to 2 years. In lieu of the repayment of the principal and accrued interest, the outstanding amounts are convertible, at the option of the note holder, generally at any time on or prior to maturity and automatically under certain conditions, into the Company’s common shares at $ to $ per share. These notes became due in 2017 and prior, and are currently past due.
During the twelve months ending December 31, 2023, noteholders converted $31,515 of notes with accrued interest of $4,015 into shares of common stock. On March 14, 2023, the Company entered into an unsecured short-term loan agreement with a third party for an aggregate of $74,650 with an interest rate of 12%, an original issue discount of $7,150, financing costs of $2,500, with installment payments of $8,361 paid back monthly starting 45 days from the issuance date, with all $74,650 of payments having been paid in full as of January 31, 2024. This same lender entered into another unsecured note on December 8, 2023, for $68,000 with a 35% discount to market, if the note is not paid back by September 30, 2024.
During the twelve months ended December 31, 2023, an additional $35,000 of the Company’s executive notes were transferred to third parties for cash. The transferred notes had no change in terms thus no resulting gain or loss on the extinguishment and transfer. As per the original terms the notes bear a 10% annual interest rate, gives the holder the right, but not the obligation to convert up to % of the amount advanced and accrued interest into shares, warrants or options of common or preferred stock of the Company at fixed rate of $ per share.
A noteholder invested $125,000 on June 9, 2023, and an additional $35,000 on September 20, 2023, in the Company with convertible notes at a 10% interest rate and a fixed conversion price of $ and $ , respectively.
On July 25, 2023, and August 30, 2023, a noteholder invested $30,000 each in the Company with convertible notes that have a 17% OID and a fixed conversion price of $ . On June 8, 2024, this same noteholder consolidated their loan into a new $108,000 note with a 20% OID and a fixed conversion price of $ .
During the twelve months ended December 31, 2023, the Company consolidated various past-due convertible promissory notes in an aggregate amount of $400,000 inclusive of interest at a 12% interest rate and with conversion rates ranging from to $ with an investor into a new single note. The convertible promissory note agreement bears interest at seven (6%) percent, has a one (1) year maturity date. The note may be repaid in whole or in part any time prior to maturity. The promissory note is convertible at the investor’s sole discretion, into common shares at a conversion price of $ . The resulting modification of the notes resulted in a forgiveness of accrued interest of $27,537.
During the twelve months ended December 31, 2023, the Company issued $200,000 in convertible notes in conjunction with the purchase of Level 2 Securities, LLC. These notes agreements bear an interest rate of 10% and are convertible at the investor’s sole discretion, into common shares at a conversion price of $ .
On August 2, 2024, the Company entered into a Securities Purchase Agreement (“SPA”) for $300,000 with an investor. The SPA includes convertible promissory notes that will total $345,000 with an original issue discount of $45,000. The funds will be paid to the Company in one or more tranches, with the maturity date beginning at the end of each tranche and for a period of twenty-four months. The note has a conversion rate of $0.035 and an interest rate of 5%. The first two tranches totalling $100,000 was received during the period ending September 30, 2024.
As of September 30, 2024, and December 31, 2023 $415,500 of these convertible notes are currently past due, with no associated penalties.
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