CONVERTIBLE DEBT |
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CONVERTIBLE DEBT | NOTE 9. CONVERTIBLE DEBT
In October and November 2023, we entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (collectively, the “Investors”) pursuant to which we agreed to sell and issue to the Investors in a private placement transaction (the “Private Placement”) in one or more closings up to an aggregate principal amount of $5,000,000 of Convertible Notes (the “Notes”). In October and November 2023, we sold and issued an aggregate of $2,600,000 of Notes that are convertible into 2,080,000 shares of common stock at a conversion price of $1.25 per share. As of December 31, 2023, we issued and sold an aggregate of $2,600,000 of Notes to certain Investors pursuant to the SPA.
The Notes mature and are due on the fifth anniversary of the issuance date in October and November of 2028. The Notes bear simple interest at a rate of 12% per annum, payable in equal monthly installments. The Notes are convertible into shares of our Common Stock, at the option of the holder, at an initial conversion price of $1.25 per share, which shall not exceed $1.55 per share. In addition, we can require Investors to convert the Notes at the then current conversion price at any time after 90 days from the issue date if the Common Stock has a closing bid price of $1.55 per share or higher on any twenty (20) days within a thirty (30) day period of consecutive trading days, or if a “fundamental change” occurs (as defined in the Securities Purchase Agreement). The Notes are unsecured and senior to other indebtedness subject to certain exceptions. Interest expense related to the Notes for the three and nine months ended September 30, 2024 were $78,000 and $234,000, respectively. Interest expense related to the Notes for the three and nine months ended September 30, 2023 were $0 and $0, respectively
Amortization of deferred financing costs were $15,620 and $46,860 for the three and nine months ended September 30, 2024, respectively which has been included with interest expense on the statement of operations, amortization of deferred financing costs were $0 and $0 for the three and nine months ended September 30, 2023, respectively.
Convertible notes consist of the following at:
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