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NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

9 Months Ended

Sep. 30, 2023

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

NOTE 3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

Purchase Funding Agreement with Directors and Unrelated Party

On July 2, 2021, the Board of Directors (“Board”) resolved that the Company required a purchase order funding facility to procure additional inventory to support the online Smart Mirror business. The Board resolved that certain Directors could negotiate the terms of a Purchase Order Funding Agreement for up to $1,020,000 with Directors S. Wallach and J. Postal and E. Fleisig, a natural person who is not affiliated with the Company. This agreement was finalized on October 18, 2021, and the Company received the funding of $1,020,000 on October 18, 2021 with an original maturity of April 2023 which was extended an additional 12 months. Under this agreement the interest terms are 5% based on a 365- day year. The note payable is due on April 13, 2024. As of September 30, 2023, the principal outstanding and accrued interest is $1,020,000 and $99,485, respectively.

Working Capital Loan with Directors and Unrelated Party

On May 1, 2022, the Company negotiated three $200,000 working capital funding agreements, to provide $600,000 in funding for daily operations. The Board resolved that certain Directors could negotiate the terms of a Working Capital Funding Agreement for up to a total of $600,000, with Directors S. Wallach (through Group Nexus, a company controlled by Mr. Wallach) and J. Postal and Mouhaned Khoury, a natural person. Under these agreements the interest terms are 5% based on a 365-day year, maturing May 1, 2024. These loans may be prepaid in full or partially without any penalty. As of September 30, 2023, the principal outstanding and accrued interest is $600,000 and $42,577, respectively.

On October 13, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Jeffrey Postal, a director, to provide funding for daily operations. The term of this agreement is 18 months and principal accrues simple interest at a rate of 5 percent per annum, maturing April 13, 2024. As of September 30, 2023, the principal outstanding and accrued interest is $50,000 and $2,411, respectively.

On December 1, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Jeffrey Postal, a director, to provide funding for daily operations. The term of this agreement is 18 months and principal accrues simple interest at a rate of 5 percent per annum, maturing June 1, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2023, the principal outstanding and accrued interest is $50,000 and $2,082, respectively.

On January 3, 2023, the Company negotiated a $40,000 Working Capital Funding agreement with Director S. Wallach (through Group Nexus, a company controlled by Mr. Wallach), to provide funding for daily operations. Principal accrues simple interest at a rate of 5 percent per annum, maturing January 15, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2023, the principal outstanding and accrued interest is $40,000 and $1,480, respectively.

On March 27, 2023, the Company negotiated a Working Capital Funding agreement with Director S. Wallach to provide funding for daily operations. Total funding under the agreement amounted to $543,500 as of September 30, 2023. Principal accrues simple interest at a rate of 5 percent per annum, maturing January 15, 2023. The loan may be prepaid in full or partially without any penalty. Accrued interest amounted to $10,399 as of September 30, 2023. See Note 6.

As of September 30, 2023 and December 31, 2022, the Company had a total of $2,461,933 and $1,802,230, of outstanding balance respectively, on the above referenced funding agreements, which includes accrued interest of $158,433 and $82,230, respectively. The outstanding principal balances and accrued interest has been presented on the condensed and consolidated balance sheet as follows:


		Notes Payable
		September 30, 2023			December 31, 2022
Current portion of notes payable and accrued interest, related parties	$	1,874,578		$	413,425
Current portion of notes payable and accrued interest, unrelated parties		587,355			206,712
Long term portion of notes payable and accrued interest, related parties		—			821,647
Long term portion of notes payable and accrued interest, unrelated parties		—			360,446
Total notes payable principle and accrued interest		2,461,933			1,802,230
Less accrued interest		(158,433	)		(82,230	)
Total notes payable	$	2,303,500		$	1,720,000

Management believes that without additional capital or increased cash generated from operations, there is substantial doubt about the Company’s ability to continue as a going concern and meet its obligations over the next twelve months from the filing date of this report.