Convertible Promissory Notes - Related Party

9 Months Ended

Sep. 30, 2024

Convertible Notes Payable [Abstract]

Convertible Promissory Notes – Related Party

Convertible Promissory Note - Related Party

We had the following promissory note as of September 30, 2024 and December 31, 2023:


	September 30, 2024		December 31, 2023
Convertible note payable with a trust related to one of the Company’s directors, convertible at $0.26 per share, at 5% interest (amended April 4, 2022, maturity date September 30, 2024)	—		3,209,617

Less: Beneficial conversion feature discount	—		(971,405)
	$	—	$	2,238,212

Interest expense which includes amortization of discount for the three and nine months ended September 30, 2024, was $0 and $245,438, respectively, and interest expense which includes amortization of discount for the three and nine months ended September 30, 2023 was $354,230 and $1,030,552, respectively. There was no accrued interest on the note payable as of September 30, 2024. The amount of the beneficial conversion feature ("BCF") discount recorded was evaluated for characteristics of liability or equity and was determined to be equity under ASC 470, Debt ("ASC 470") and ASC 480, Distinguishing Liabilities from Equity ("ASC 480"). The Company recognized this as additional paid in capital, and the discount was being amortized over the life of the note.

On February 22, 2024, the Company entered into an agreement to amend the related party convertible promissory note with the Buckhout Charitable Remainder Trust, resulting in the elimination of the BCF discount feature, change in the interest rate, extension of the term, and change in the payoff schedule. As part of this amendment, a partial payment of $809,617 was made on the date of the agreement, resulting in an outstanding balance of $2,400,000 as of that date. The change in terms of the note were evaluated for

characteristics of modification or extinguishment, and it was determined that under ASC 470, the debt amendment was considered to be an extinguishment, thus the amended note is considered a new note. As of February 22, 2024, the remaining unamortized carrying value of the BCF was $761,783, which was treated as a loss on debt extinguishment on the income statement. Concurrent with this amendment, we determined that the trustee of the Buckhout Charitable Remainder Trust (who resigned as an officer of the Company) is no longer a related party to the Company. See Note 7, "Notes Payable" for more information about the terms of the new note.