Convertible Notes Payable

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Convertible Notes Payable

Note 7 – Convertible Notes Payable

Convertible notes payable consisted of the following:

	September 30,		December 31,
	2023		2022
August 3, 2022 ($5,000,000)	$	5,000,000	$	5,000,000
August 3, 2022 ($1,000,000)		1,000,000		1,000,000
August 22, 2022 ($500,000)		500,000		500,000
September 22, 2022 ($250,000)		250,000		250,000
September 25, 2022 ($600,000)		600,000		600,000
September 25, 2022 ($600,000)		600,000		600,000
September 29, 2022 ($50,000)		50,000		50,000
September 29, 2022 ($500,000)		500,000		500,000
October 10, 2022 ($500,000)		500,000		500,000
October 13, 2022 ($750,000)		75,000		75,000
October 13, 2022 ($50,000)		50,000		50,000
October 14, 2022 ($50,000)		50,000		50,000
January 4, 2023 ($500,000)		500,000		-
Total convertible notes payable (current)	$	9,675,000	$	9,175,000

From August 3, 2022 through January 4, 2023, the Company conducted a convertible note offering for a maximum offering of $15,000,000 and a minimum of $2,000,000 (the “Convertible Note Offering”).

Pursuant to the terms of the Convertible Note, the principal amount of the Note that may be outstanding from time to time bears interest per annum until paid in full at a rate equal to 6%, compounded annually. The principal and interest of the Note was due and payable to the noteholder on the one-year anniversary of the date of the Note (the “Maturity Date”) unless all principal and interest due under the Note had been converted by the Maturity Date.

The conversion price was equal to $0.25 per share of common stock. The Notes had an automatic conversion upon the date of effectiveness of registration of the Notes on a registration statement filed with the Securities and Exchange Commission (the “SEC”), and were subject to a 4.99% beneficial ownership limitation. The Notes were convertible into shares of common stock at the option of the Noteholder at any time prior to the Maturity Date.

The Company analyzed the conversion option in the Notes for derivative accounting treatment under ASC Topic 815, “Derivatives and Hedging,” and determined that the instruments do not qualify for derivative accounting.

As of December 31, 2022, the Company received $9,175,000 from a total of 12 accredited investors pursuant to the Convertible Note Offering.

As of September 30, 2023, the Company received $9,675,000 from a total of 13 accredited investors pursuant to the Convertible Note Offering.

On October 1, 2023, the Company entered into Conversion Agreements with each of the convertible noteholders to convert their respective notes into shares of Class B Preferred Stock. Pursuant to the Conversion Agreements, each noteholder agreed to receive one share of Class B Stock for each $2.00 of principal and unpaid interest accrued through the closing date of the Conversion Agreement. As of the closing date of the Conversion Agreement, and each of them, no portion of any of the Notes had been converted into shares of the Company’s common stock.