v3.25.2
Convertible Notes Payable
6 Months Ended
Jun. 30, 2025
Debt Disclosure [Abstract]  
Convertible Notes Payable

Note 4: Convertible Notes Payable

 

The Convertible Notes Payable are defined below.

 

An $8,200 convertible note that came into the Company through the July 3, 2017 merger. Accrued interest to June 30, 2025, was $3,276.

 

 

On September 14, 2020, the Company issued a Senior Secured Convertible Promissory Note in the amount of $3,105,897 bearing interest of 10% per annum with a maturity date of 3 years from the anniversary date of the funding advance and is convertible into shares of Common Stock equal to 85% multiplied by the average of the 5 closing prices of the Common Stock immediately preceding the Trading Day that the Company receives a Notice of Conversion with a floor price of $0.15. On October 1, 2020, the amount of $1,850,000 was advanced to the Company. The balance of the principal of this note is made up of the principal and interest on the existing promissory notes totaling $1,100,000 (1), and the principal and interest on the existing note issued August 4, 2020, in the amount of $150,000 (2). Each of the existing notes, (1) and (2), are deemed to be cancelled and are replaced by the note in the amount of $3,105,896.72 described above. The company evaluated the note for a beneficial conversion feature at the date of issuance noting that there was no BCF related. The security interest of this loan is junior and subordinate to all existing security. On September 14, 2023, an amendment to this loan was signed agreeing to roll the accrued interest to date of $918,154.10 into the principal amount resulting in total principal of $4,024,050.82 (the “New Principal Amount”). The maturity date was extended to March 14, 2024. On March 14, 2024, a second amendment to this loan was signed agreeing to roll the accrued interest to date of $200,651 into the principal amount resulting in a total principal amount of $4,224,702 (the “New Principal Amount 2”). The maturity date was extended to July 14, 2024. On July 26, 2022, this note required derivative treatment. On March 31, 2024, the derivative value of this note was $74,724. On January 14, 2025, the Company and Sphere 3D agreed to an amendment to the convertible promissory note which extended the maturity date to January 14, 2026 and adds the unpaid interest of $220,090 to the principal amount. The balance principal balance of the note at June 30, 2025 was $4,586,001 (the “New Principal Amount 3”) and accrued interest was $209,825.

 

On May 8, 2023, the Company issued a convertible promissory note in the amount of $21,000 bearing interest of 12% per annum with a maturity date of one year (May 8, 2024) and has the option to convert into shares of Common Stock any time beginning 180 days following the date of the Note and ending on the maturity date. The conversion price is calculated at 61% of the Market Price (lowest trading price during the 20-trading day period). The Company has the right to prepay any time before maturity. This note had an Original Issue Discount of $5,000 and as of March 31, 2024, it is fully amortized. As of December 31, 2023, $9,875 was converted into 500,000 common shares leaving the remaining principal balance of $11,125. The conversions were within the terms of the agreement and no gain or loss was recognized on the conversions. During the first quarter of 2024, this note was paid in full including interest of $3,675.

 

On January 8, 2024, the Company issued four convertible promissory notes as part of a debt restructuring, totaling $326,883, representing amounts owed to executives and management for services rendered under Consulting Agreements. Each note had a one1-year term, carried an interest rate of 10% per annum, and was convertible at a fixed rate of $0.0347 per share. As of December 31, 2024, the debt discount stood at $2,123, and accrued interest on these notes amounted to $31,972. On January 1, 2025, two of these notes, along with accrued interest, were converted into common shares, fully amortizing the debt discount. These notes, totaling $230,000 plus $22,496 accrued interest, were converted into 7,271,300 restricted common shares. During the second quarter of 2025, $78,833 principal plus $8,378 accrued interest of the remaining notes was converted into 2,512,930 common shares leaving one convertible promissory note in the amount of $18,000 with accrued interest of $2,653 at June 30, 2025 also discussed in Note 5. All conversions were in accordance with the agreements and no gains or losses were recorded as part of the conversions.