Notes Payable |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
NOTES PAYABLE |
On February 16, 2021, the Company entered into separate Securities Purchase Agreements (the “Cavalry/Mercer SPAs”), with each of Cavalry Fund I LP (“Cavalry”) and Mercer Street Global Opportunity Fund, LLC (“Mercer”), pursuant to which the Company received $500,500 and $500,500 from Cavalry and Mercer, respectively, in exchange for the issuance of: (i) Original Issue Discount 12.5% Convertible Notes (the “Cavalry/Mercer Notes”) in the principal amount of $572,000 to each of Cavalry and Mercer; and (ii) five-year warrants (the “Original Cavalry/Mercer Warrants”) issued to each of Cavalry and Mercer to purchase 2,486,957 shares of Common Stock at an exercise price of $0.24 per share.
In connection with the December 30, 2022 Note Amendment Transaction, described in more detail in Note 13 below, the Original Cavalry/Mercer Warrants were irrevocably exchanged for 12-month non-convertible promissory notes in the amount of $482,000 (the “Exchange Notes”) to each of Cavalry and Mercer. This exchange caused the cancellation of the Original Cavalry/Mercer Warrants for all purposes. The Company accounted for the aggregate value of the notes issued of $964,000, less the fair value of the Original Cavalry/Mercer Warrants exchanged for these notes of $43,608, totaling $920,392 as a component of the loss on convertible debt.
The Exchange Notes have a maturity date of December 30, 2023 and carry an interest rate of ten percent (10%). The Company shall have the right, but not the obligation, in lieu of a cash payment upon maturity of the Exchange Notes, to issue 51,901,711 shares of Common Stock, as adjusted for any stock splits, dividends or other similar corporate events, in full satisfaction of its obligations under each of the Exchange Notes (or any pro rata portion of such number of shares in partial satisfaction of such obligations). The Company is under no legal obligation to reserve such number of shares for future issuance.
Notes payable to Cavalry and Mercer at September 30, 2023 consists of the following:
Interest expense totaled $24,635 and $0 for the three months ended September 30, 2023 and 2022, respectively, and $73,371 and $0 for the nine months ended September 30, 2023 and 2022, respectively. |