Notes Payable

3 Months Ended

Mar. 31, 2025

Debt Disclosure [Abstract]

Notes Payable

6. Notes Payable

Debt consisted of the following as of March 31, 2025 and December 31, 2024:

	March 31,			December 31,
	2025			2024
Promissory notes	$	223,544		$	409,696
Motor vehicle and equipment loans		2,010,895			1,970,700
Total notes payable		2,234,439			2,380,396
less current portion of notes payable		(774,738	)		(939,110	)
Long term portion of notes payable	$	1,459,701		$	1,441,286

Promissory Note Payable

During 2021, the Company executed a promissory note payable with an aggregate principal balance of $33,500 (25,000 GBP). The note was due after a period of two months, followed by mutually agreed upon monthly extensions, and does not bear interest. As of March 31, 2025 and December 31, 2024, the promissory note payable balance was $32,395 and $31,380, respectively, and continues to be automatically extended on a monthly basis. This note was paid in full on April 2, 2025.

In November 2024, the Company executed a promissory note payable with a finance company to fund its directors and officers’ insurance policy for $500,923. This note bears interest at an annual rate of 8.45% with seven monthly payments beginning in December 31, 2024. In November 2023, the Company executed a promissory note payable with a finance company to fund its directors and officers' insurance policy for $526,282. This note bore interest at an annual rate of 8.74% with six monthly payments beginning in December 2023. The note was repaid in full in May 2024. For the three months ended March 31, 2025 and 2024, the Company recorded interest expense of $6,680 and $6,748, respectively. As of March 31, 2025 and December 31, 2024, the promissory note payable balance was $191,149 and $378,316, respectively.

Motor Vehicle and Equipment Loans

Periodically, the Company enters into loans to purchase motor vehicles and certain equipment. For the three months ended March 31, 2025, the Company entered into new loans totaling $47,080. For the year ended December 31, 2024, the Company entered into loans totaling $2,020,511. These loans are secured by the underlying assets included in property and equipment. The loans have variable interest rates ranging from 10.15% to 12.00% and mature from September 2028 to March 2030. Minimum monthly payments total $42,312. For the three months ended March 31, 2025 and 2024, interest expense under the outstanding loans was $58,225 and $0, respectively. As of March 31, 2025 and December 31, 2024, motor vehicle and equipment loans totaled $2,010,895 and $1,970,700, respectively.

Convertible Notes Payable

In March 2024, the Company issued convertible notes payable (“March 2024 Convertible Notes”) totaling $21,063,748 and received aggregate cash of $20,550,000. One of the notes totaling $513,748 was issued to the placement agent in lieu of cash issuance costs. Issuance costs paid in cash totaling $521,423 and the value of the note issued upon issuance to the placement agent were expensed in selling, general and administrative costs in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2024.

In June 2024, the Company issued additional convertible notes payable (“June 2024 Convertible Notes”) totaling $5,494,395 and received aggregate cash of $5,386,228. One of the notes totaling $108,167 was issued to the placement agent in lieu of cash issuance costs and was expensed in selling, general and administrative costs in the condensed consolidated statement of operations and comprehensive loss for the year ended December 31, 2024. Issuance costs paid in cash were negligible. The March 2024 Convertible Notes and the June 2024 Convertible Notes are collectively the “Convertible Notes”.

The Convertible Notes are payable on demand in March 2029 and bear an annual interest rate of 6% through March 7, 2025 and 8% thereafter. Upon a qualified financing event the Convertible Notes convert into the shares issued in that qualified financing event at a price per share equal to 80% of the share price issued subject to a valuation cap. Upon a qualified transaction, the noteholders may elect to receive either 1.5x the principal and accrued interest balance in cash or convert into common shares.

The Convertible Notes are recorded on the condensed consolidated balance sheet at their fair values. The fair value of the March Convertible Notes on the date of issuance was $21,063,748. The fair value of the June Convertible Notes on the date of issuance was $5,494,395. The fair value of the Convertible Notes as of March 31, 2025 has been determined to be $34,390,592 and the resultant change in fair value of $957,408 has been recorded in other income and expense in the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2025. As of March 31, 2025, the total principal and accrued interest of the Convertible Notes is $26,558,143 of which $1,651,906 relates to the interest portion.