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Jun. 30, 2025 | |||||||||||||||||||||||||||||||||||||||||||||||
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| DEBT | NOTE 4 – DEBT
Promissory Notes Payable - Related Party
In June 2021, the Company entered into an Asset Purchase Agreement with Singlepoint to purchase certain assets in exchange for the issuance of a promissory note (the “Note”) for $63,456, which is reflected as a note payable to a related party in accompanying balance sheet. The Note bears interest at 5%, has a three-year term, and is due in monthly installments of $1,902 beginning August 1, 2021. The Company has not made any payments on the Note and is currently in default. Accrued interest on the Note totaled $11,100 and $9,527 at June 30, 2025 and December 31, 2024.
During the six months ended June 30, 2025, the Company borrowed $399,000 in a series of cash payments from the Company’s former CEO and shareholder in exchange for the issuance of a promissory note and repaid $25,000 to him. The promissory note is not secured by Company assets, does not bear interest and is due in full on December 31, 2025. The promissory note totals $1,739,550 at June 30, 2025.
Convertible Notes Payable and Derivatives
At June 30, 2025, the Company had two notes payable outstanding, which, upon an event of default, contain a conversion feature meeting the definition of a derivative liability.
The Notes have maturity dates ranging from August 30, 2025 to December 15, 2025 and carry interest rates ranging from 8% to 13%. The notes with the lenders have cross default provisions only between the notes of that lender. No cross default occurred in 2025 or 2024. For one of the Notes which is convertible after 180 days from issuance or upon an event of default, the conversion rate shall be 75% of the Market Price with the Market Price being defined as the lowest trading price of the Company's common stock over the 10 preceding trading days. For the other note, which is convertible only after an Event of Default, the conversion rate shall be 70% of the market price with the market price being defined as the lowest trading price of the Company's common stock over the 10 preceding trading days.
On March 4, 2025, the Company issued a note payable which contained a conversion feature meeting the definition of a derivative liability. Pursuant to the Company’s contract ordering policy, the conversion feature was valued at $223,726 upon issuance and recorded as a derivative liability, resulting in additional debt discounts totaling $81,000.
During the six months ended June 30, 2025, the Company made principal payments of $244,622 on convertible notes payable, resulting in a gain on debt extinguishment from settlement of derivative liabilities totaling $47,046.
During the six months ended June 30, 2025, the Company amortized $116,773 of debt discount resulting in an unamortized debt discount of $59,885 as of June 30, 2025. Accrued interest as of June 30, 2025 was $19,618.
Convertible notes value as of June 30, 2025 and December 31, 2024:
Scheduled maturities of the above related party and convertible notes debt remaining as of June 30, 2025 for each respective fiscal year end are as follows:
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