CONVERTIBLE DEBT |
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| CONVERTIBLE DEBT | NOTE 6: CONVERTIBLE DEBT 2025 Convertible Notes The Company entered into twelve convertible note agreements in exchange for aggregate gross proceeds of $2,530,000 to eleven lenders during the three months ended March 31, 2025 (the “2025 Convertible Notes”). The 2025 Convertible Notes bear interest at a rate of 20.0% per annum. The 2025 Convertible Notes have maturity dates that range from 30-days to one year from the convertible note issuance date, optional conversion period that ranges from to ninety days, and a conversion price that ranges from $1.00 to $1.15. The Company entered into convertible note agreements with two related-party investors holding beneficial ownership interests exceeding 5.0% of the Company’s common stock. The aggregate principal amount of these convertible notes was $500,000. A summary of the individual convertible notes was:
The 2025 Convertible Notes are convertible at the option of the holder into shares of the Company’s common stock at a conversion price. The number of shares issuable upon conversion is determined by dividing the sum of the outstanding principal and accrued interest by the conversion price. The 2025 Convertible Notes may be prepaid in full or in part by the Company at any time without penalty. The Company elected the fair value option for the 2025 Convertible Notes and therefore measured the 2025 Convertible Notes at fair value at issuance and each subsequent reporting period, with changes in fair value recognized in earnings. As of issuance and at March 31, 2025, the fair value of the 2025 Convertible Notes was determined to be $2,530,000 and $2,529,384, respectively (see Note 9). The 2025 Convertible Notes were convertible into 2,313,630 shares of the Company’s common stock on March 31, 2025. Assumed 2024 Note In January 2025, the Assumed 2024 Note was extinguished as part of the 3(a)(10) Settlement Agreement (see Note 5). 2024 Convertible Notes During the three months ended March 31, 2025, the Company extended the maturity dates and the period the conversion option was exercisable because of the volatility the Company's common stock price was experiencing. The extensions to the conversion periods were accounted for as modifications. The 2024 Convertible Notes may be prepaid in full or in part by the Company at any time without penalty. The 2024 Convertible Notes were convertible into 2,542,059 shares of the Company's common stock as at March 31, 2025. |
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