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Note 5 - Convertible Note
9 Months Ended
Sep. 30, 2025
Notes to Financial Statements  
Convertible Debt [Text Block]

Note 5 Convertible Note

 

The Company had a Convertible Note outstanding with Alpha Capital Anstalt (“Alpha”) which was due January 8, 2025 (the “Note”) and was considered in default. The Note was a result of an exchange agreement executed on February 8, 2024 in which the parties agreed to exchange the then outstanding promissory note into a convertible note. The Note accrued interest at 12% per annum and would increase to the lesser of 18% or the maximum rate permitted under applicable law upon an Event of Default as defined under the Note. 

 

 

During the nine months ended September 30, 2025, the conversion price of the Note was reduced from $1.10 to $0.8294 pursuant to dilution protection provisions and due to the sale of Series F preferred stock and Series F warrants with a conversion price and exercise price of $0.8294 (see Note 8). The Company recognized a loss on debt extinguishment of $125,242 for the incremental value of the conversion feature due to the reduced conversion price. The incremental value was determined using a Black-Scholes pricing model pre and post modification and the following inputs: expected term 0.50 years, risk free rate of 4.27%, volatility of 203.53%, and dividend rate of 0.00%.

 

During the nine months ended September 30, 2024, the conversion price of the Note was reduced from $62.50 to $30.00 pursuant to dilution protection provisions and due to the reduction in warrant exercise prices to $30.00 to induce exercise (see Note 7). The Company recognized in interest expense the amount of $3,488,851 for the incremental value of the conversion feature due to the reduced conversion price. The incremental value was determined using a Black-Scholes pricing model pre and post modification and the following inputs: expected term 0.92 years, risk free rate of 4.83%, volatility of 89.60%, and dividend rate of 0.00%.

 

During the three months ended September 30, 2025, $8,612 accrued interest was converted into 10,383 shares of common stock at a conversion price of $.8294.  During the nine months ended September 30, 2025 and 2024, Alpha converted $1,425,606 and $100,000 of outstanding principal and accrued interest into 1,490,495 and 1,597 shares of Common Stock, respectively. 

 

As of September 30, 2025, the company no longer had outstanding principal and accrued interest on the Note. As of September 30,2025, and December 31, 2024, the outstanding principal and accrued interest were $1,333,333 and $47,123, respectively.

 

For the nine months ended September 30, 2025 and 2024, we recognized interest expense on the Note of $92,273 and $778,874, respectively.