Convertible Notes and Line of Credit

6 Months Ended

Jun. 30, 2024

Convertible Notes And Line Of Credit

Convertible Notes and Line of Credit

Note 5. Convertible Notes and Line of Credit

Line of Credit

In 2008, the Company entered into an agreement with an unrelated third party for an unsecured Line of Credit up to a maximum of $1,000,000. The Line of Credit carries an interest rate on amounts borrowed of 9% per annum. All funds originally advanced under the facility were due and payable by November 1, 2012. As an inducement to provide the facility, the lender was awarded an immediate option to purchase 50,000 shares of common stock of the Company at $1.75 per share. In addition, the lender received an option to purchase a maximum of 250,000 additional shares of common stock of the Company at $1.75 per share. The options expire following repayment in full by the Company of the amount borrowed. The Company is in default under the repayment terms of the agreement. At June 30, 2024 and December 31, 2023, the unpaid principal and accrued interest due on the obligation totaled $2,347,559 and $2,302,929, respectively.

Convertible Notes

Convertible Notes issued pursuant to the two Private Placements total $962,500 in principal and became due and payable beginning in March 2012 and extending to various dates through June 2013. As of the date of the filing of this report, all the aforementioned debt obligations remain unpaid and in default under the repayment terms of the notes. In November 2020, the Superior Court of the State of Delaware awarded Judgments in favor of certain holders of these Promissory Notes who filed suit against the Company. As a result, the Company must carry an aggregate of $486,796 (total principal and interest) as debt owed to these noteholders. As of June 30, 2024 and December 31, 2023, all Notes issued had a total outstanding principal of $962,500 and accrued interest, including the additional interest awarded pursuant to the Court Judgments, of $1,185,412 and $1,145,957 respectively.

The table below summarizes the Company’s debt arising from the above-described sources as of June 30, 2024 and December 31, 2023:

	June 30,		June 30,
	2024		2023
Private placements - March 1, 2010*	$	475,000	$	475,000
Private placements - October 25, 2010		487,500		487,500
	$	962,500	$	962,500

* Of the 2010 placements above, $75,000 is due to a related party.