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NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

9 Months Ended

Sep. 30, 2024

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 Stewart Wallach and Jeffrey 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. Under this agreement the interest terms are 5% based on a 365- day year. The note payable was amended for a new maturity date of November 30, 2024. As of September 30, 2024, the principal outstanding and accrued interest is $1,020,000 and $150,625, 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 Stewart Wallach (through Group Nexus, a company controlled by Mr. Wallach), Jeffrey Postal, and an individual unrelated shareholder, each entered into a capital funding agreement. The term of each agreement was 18 months with principal accruing a simple interest rate of 5 percent per annum, amended to mature on November 1, 2024. On September 30, 2024, Mr. Postal and Mr. Wallach’s agreements were amended for a new maturity date of November 30, 2024. The individual unrelated shareholder’s agreement was not amended and is in default. The Company is currently negotiating with this individual as of the date of this filing. These loans may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $600,000 and $72,577, respectively.

On October 13, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Director Jeffrey Postal, a director, to provide funding for daily operations. The initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,918, 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 initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,582 , respectively.

On January 3, 2023, the Company negotiated a $40,000 Working Capital Funding agreement with Director Stewart 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, amended to mature November 30, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $40,000 and $3,485, respectively.

On March 27, 2023, the Company negotiated a Working Capital Funding agreement with Director Stewart Wallach to provide funding for daily operations. Total funding under the agreement amounted to $632,500 as of September 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum, amended to mature November 30, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $632,500 and $39,134, respectively.

On January 16, 2024, the Company negotiated a Working Capital Funding agreement with Director Jeffrey Postal to provide $50,000 in funding for daily operations. Principal accrues simple interest at a rate of 5 percent per annum, amended to mature November 30, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $1,767, respectively.

As of September 30, 2024 and December 31, 2023, the Company had a total of $2,442,500 and $2,352,502, respectively of outstanding principal, on the above referenced funding agreements, and accrued interest of $277,087 and $187,974, respectively. The outstanding principal balances and accrued interest has been presented on the condensed and consolidated balance sheet as follows:


		Notes Payable
		September 30, 2024			December 31, 2023
Current portion of notes payable and accrued interest, related parties	$	2,105,186		$	1,946,315
Current portion of notes payable and accrued interest, unrelated parties		614,401			594,161
Total notes payable principal and accrued interest		2,719,587			2,540,476
Less accrued interest		(277,087	)		(187,974	)
Total notes payable	$	2,442,500		$	2,352,502

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.