CONVERTIBLE NOTES

12 Months Ended

Dec. 31, 2023

CONVERTIBLE NOTES [Abstract]

CONVERTIBLE NOTES

Note 12 CONVERTIBLE NOTES

	December 31, 2023			December 31, 2022
Principal outstanding	$	23,000,000		$	24,000,000
Add: accrued interest		1,879,068			1,120,767
Less: unamortized debt issuance costs		(8,887	)		(14,220	)
Convertible note payable, net of debt issuance costs	$	24,870,181		$	25,106,547

On September 1, 2021, the Company entered into a Note Purchase Agreement with certain accredited investors and a director of the Company, pursuant to which the Company issued at 100% of par value $24,000,000 in aggregate principal balance of 3.5% Convertible Promissory Notes due September 1, 2025 (the “Notes”), convertible into (i) shares of Company common stock, and (ii) warrants to purchase shares of Company common stock equal to 20% of the principal amount of the Notes divided by the conversion price of the Notes (the “Warrants”). The Notes will mature on the fourth-year anniversary of the date of issuance, which time is also the termination date of the Warrants if issued. The conversion price of the Notes and the exercise price of the Warrants is $11.98 per share, which was the consolidated closing bid price of the Company common stock as reported by Nasdaq on August 31, 2021, the most recently completed trading day preceding the Company entering into the Note Purchase Agreement with investors with respect to the Notes. The holders of the Notes may, at any time, convert all or a portion of the Notes plus accrued interest (subject to a minimum principal amount of $100,000) at the conversion price. The Company may redeem all or a portion of any Notes then outstanding at any time after the first anniversary of issuance at a price of 112.5% of par value plus accrued interest. In the event of a change of control of the Company, the Company may redeem all Notes then outstanding at a price of 108% of par value plus accrued interest. Interest expense on the Notes is payable upon maturity or earlier redemption unless the Notes are converted prior to such time. In the event the holders of the Note convert all or a portion of the Notes, the related accrued interest is converted at the conversion price. Interest expense related to the Notes was $829,452 and $840,767 for the years ended December 31, 2023 and 2022, respectively.

The Company evaluated the embedded features in accordance with ASC 815-15-25 and determined embedded features are all clearly and closely related to the debt host instrument and therefore are not required to be bifurcated and separately measured at fair value. The Warrants were not issued in connection with the Notes, and issuance of the Warrants is contingent upon conversion of the Notes at the option of the Holder, therefore no portion of the proceeds are allocated to the Warrants.

                The Company did not elect the fair value measurement option for the Notes. The estimated fair value of the Notes was $22,609,000 and $21,450,000 as of December 31, 2023 and December 31, 2022, respectively.

  
              The fair value of the Notes was calculated using the present value of the Notes and the estimated fair value of the conversion option calculated using the Black-Scholes model and the following Level 3 inputs:

	December 31, 2023		December 31, 2022
Fair value of Company’s common stock	$	2.93	$	2.73
Dividend yield		0%		0%
Expected volatility		82.0%		84.0%
Risk Free interest rate		4.40%		4.30%
Expected life (years) remaining		1.67		2.67
Exercise price	$	11.98	$	11.98

The Company incurred debt issuance costs associated with the Notes in the amount of $21,330, which were deferred and are being amortized over the term of the Notes. During the years ended December 31, 2023 and 2022, the Company recognized $5,333 and $5,333 in amortization of debt issuance costs, respectively.

On September 12, 2023, the Company redeemed $1,000,000 in principal and $71,151 of accrued interest thereon for an aggregate redemption price of $960,000 resulting in a gain of $111,151, which is included in other income and expense in the Consolidated Statements of Operations.