Convertible Notes |
6 Months Ended |
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Jun. 30, 2025 | |
| Debt Disclosure [Abstract] | |
| Convertible Notes | NOTE 7. Convertible Notes
In November 2023, the Company issued promissory notes in the amount of $550,000, with a maturity date at the earlier of one year or 30 days from the closing date of a registered security token offering which was a planned offering yet to be approved by the Securities and Exchange Commission. The promissory notes had an effective (bonus) interest rate of 100% of the note principal, therefore the Company was recording interest of $550,000 ratably over the term of the promissory notes. In addition, the Company issued 550,000 warrants to purchase shares of common stock to the holders of the promissory notes as additional consideration (see NOTE 8). The value of the warrants was $87,970, which was recorded as a debt discount and increase to additional paid in capital at note inception. Further, as additional consideration, upon the closing date of an ION Digital Registered Security Token Offering, the Company would be required to issue Registered Tokens, which would be derived from the Offering, at the sum of which was to be equal to two and one-half times the principal of the promissory notes. Said tokens, all or in part, were to be convertible into the Company’s common stock at a 20% discount to the prevailing bid price on the date that the lender issues to the Company a notice of conversion.
Effective November 1, 2024, all promissory notes were amended to extend the maturity date to July 1, 2025 and the Company was responsible to pay an additional interest amount that was 10% of the total amount due at the time of amendment, or $110,000. The Company accounted for this modification as a debt extinguishment, therefore this additional cost of financing was recorded as a loss on debt extinguishment during the year ending December 31, 2024. In conjunction with the amendment, the Company pledged 489 of their Orebits AU Certificates as collateral for the loans (see NOTE 5). Further, the Company assigned the obligation for the issuance of any Registered Tokens to a related party and the holders of the promissory notes released the Company from such obligation recorded in the original promissory notes.
For the six and three months ended June 30, 2024, the Company recorded interest expenses of $274,247 and $137,124, respectively, and amortized debt discount of $43,986 and $21,993, respectively, into interest expense related to the loans payable. The debt discount was fully amortized and all interest due on the note was recognized as of December 31, 2024, therefore no interest expense was recorded during the six months ended June 30, 2025.
As of June 30, 2025 the balance of the loans payable balance was $550,000 and the balance of the interest accrued was $660,000.
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