NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

12 Months Ended

Dec. 31, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

NOTE 6 – NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE

The following is a summary of loans and notes payable outstanding as of December 31, 2023 and 2022. Related parties noted below are either members of management, board of directors, significant shareholders, or individuals that have significant influence over the Company.

Convertible Notes Payable (EMA)

In 2020, the Company entered into securities agreement with an investor pursuant to which the Company agreed to sell to the investor a $300 thousand convertible note bearing interest at 12% per annum (the “Note”). The Note matured in 365 days from the date of issuance. Upon maturity of the convertible note, interest rate was increased to 24%. The Note was convertible at the option of the holder at any time into shares of the Company’s common stock at $9.50 for the one hundred and eighty (180) days immediately following the issue date and thereafter shall equal the lower of: 1) the lowest closing price of the common stock during the preceding twenty-five (25) trading day, ending on the last complete trading day prior to the issue date of the Note. 2) seventy-five (75) percent of the lowest trading price for the common stock during the twenty-five (25) consecutive trading days preceding the conversion date with a minimum trading volume of one thousand (1,000) shares.

In the event of a default of the Note, the Holder, in its sole discretion may elect to use a conversion price equal to the lower of: 1) the lowest trading price of the common stock on the trading day immediately preceding the issue date or 2) seventy-five (75) percent of either the lowest trading price or the closing bid price, whichever is lower during any trading day in which the event of default has not been cured.

The embedded conversion feature of this Note was deemed to require bifurcation and liability classification, at fair value. Pursuant to the securities agreement, the Company also sold warrants to the investors to purchase up to an aggregate of 21,052 shares of common stock exercisable at $14.25 and expire in five (5) years. The fair value of the derivative liability and warrants as of the date of issuance was in excess of the Note (see Note 7 for valuation) resulting in full discount of the Note. The conversion feature and warrants have various reset provisions for which lower the exercise price and share and warrants issuable. In April 2023, the parties settled and extinguished the convertible note, warrants, and derivative liability.

See Note 9 - Commitment and Contingencies

As of December 31, 2023 and December 31, 2022, the convertible note payable balance was $0 and $280 thousand, and has accrued interest of $0 and $119 thousand, respectively.

Convertible Notes Payable (Forbearance)

In 2014, the Company issued $400 thousand in convertible notes payable with interest rates ranging from 10% to 12% and an original maturity date of September 30, 2022. On March 30, 2022, the Company entered into forbearance agreements in exchange for not enforcing the terms of the original agreements. In November 2022, the parties agreed to extend the terms of the forbearance agreements for an additional six months. As of December 31, 2022, the balance of the convertible note was $400 thousand, the accrued interest related to the convertible notes was $278 thousand. In February 2023, the Company paid off the note and accrued interest in its entirety.

Notes Payable

In 2020, the Company entered into a 30-year unsecured note payable with U.S. Small Business Administration for $68 thousand in proceeds. The notes payable incurred a $100 fee upon issuance and incurs interest at 3.75% per annum. All payments of principal and interest are deferred for thirty months from the date of the note. Payments totaling $4 thousand are due each year through the maturity date of July 1, 2050.

As of December 31, 2023 and December 31, 2022, the balance of the note payable was $66 thousand and $68 thousand, and accrued interest was zero and $6 thousand, respectively.

A significant shareholder funded the Company’s operations through notes payable primarily in 2009 and 2010. On May 2, 2021, the Company entered into a debt reduction and confirmation agreement with the significant shareholder that is no longer a related party. The Company later entered into a forbearance agreement in exchange for not enforcing the terms of the original agreement. In February 2023, the Company paid off the note and accrued interest in its entirety.

The Company entered into several notes payable with third parties. The Company later entered into forbearance agreements in exchange for not enforcing the terms of the original agreement. In November 2022, the parties agreed to extend the terms of the forbearance agreement for an additional six months. In February 2023, the Company paid off the notes and accrued interest in its entirety.

Note payable - related party

The Company entered into several notes payable with third parties. The Company entered into forbearance agreements in exchange for not enforcing the terms of the agreement. The interest rate on the note payable is 0% to 18% per annum. The expiration date of the agreement ranged from September 27, 2022 to October 4, 2022. In November 2022, the parties agreed to extend the terms of the forbearance agreement for an additional six months. In February 2023, the Company paid off the note and accrued interest in its entirety.

As of December 31, 2023 and 2022, the balance of the notes payable was zero and $423 thousand, respectively, and the accrued interest related to the notes payable was zero and $538 thousand, respectively.

As of December 31, 2023 and 2022, the balance of the related party notes payable was zero and $88 thousand, respectively, with an interest rate of 12% per annum and an expiration date on September 29, 2022. The accrued interest to the related party notes payable was zero and $68 thousand respectively.