Notes Payable

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Notes Payable

Note 5 – Notes Payable

As of March 31, 2024 and through the date of this filing, notes and convertible notes payable with principal amounts totaling $5,642,801 and $1,956,000, respectively, were past due. Such notes continue to accrue interest and all relevant penalties have been accrued as of March 31, 2024. The Company is in negotiations with certain holders of notes payable to extend the maturity dates of such notes or to convert the principal and accrued interest into equity. As of March 31, 2024, the Company had an accrued interest balance of $829,894 related to notes and convertible notes payable that were past due.

During the three months ended March 31, 2024 and 2023, the Company recorded interest expense of $137,121 and $135,770, respectively, and amortization of debt discount of $5,956 and $140,248, respectively. As of March 31, 2024 and December 31, 2023, the Company had $2,558,529 and $2,419,666, respectively, of accrued interest (including interest in the form of warrants (see Note 4, Fair Value) and penalties related to notes payable, which is included with accrued interest and accrued interest – related parties on the condensed consolidated balance sheets.

Convertible Notes Payable

During the three months ended March 31, 2024, a convertible note with $100,000 of principal outstanding was automatically converted into 13,333 shares of Series C Convertible Preferred Stock at a price of $7.50 per share and the Company elected to convert $4,910 of accrued interest under such note into 6,546 shares of common stock at a price of $0.75 per share.

On March 22, 2024, the Company completed its private offering of 8% Convertible Notes that are convertible into shares of the Company’s Series C Convertible Preferred Stock at a conversion price of $7.50 per share. The Company sold $4,760,170 aggregate principal amount of notes in the offering and issued investors warrants to purchase 4,321,926 shares of common stock at an exercise price of $1.25 per share. Additional subscriptions will not be accepted.

Convertible Notes Payable - Related Parties

In March 2024, the Company received additional advances of $146,672 under a note originally issued to George Verstraete, a director of the Company, and assigned to a trust controlled by Darlene Soave, a director of the Company, (the “Verstraete Note”), and, as a result, increased the outstanding principal balance of the Verstraete Note to $3,736,708. In connection with the advances, the Company accrued an obligation to issue five-year immediately vested warrants to purchase an aggregate of 117,338 shares of common stock at an exercise price of $1.25 per share to the trust controlled by Ms. Soave, the holder of the note. The warrants had an issuance date relative fair value of $6,666 which was included within accrued interest-related parties and recorded as a debt discount and will be amortized over the term of the note.