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Convertible Notes Receivable

12 Months Ended

Dec. 31, 2024

Convertible Notes Receivable [Abstract]

Note 11 – Convertible Notes Receivable

The Company’s convertible notes receivable consisted of the following for the years ended December 31, 2024 and 2023:

	Convertible Notes Receivable
Beginning	$	-
Convertible note receivable		2,500,000
Fair value changes of convertible notes		102,027
As of December 31, 2023		2,602,027
Reversal of fair value changes of convertible notes		(102,027	)
Expected credit losses on convertible note receivable		(2,500,000	)
As of December 31, 2024	$	-

On June 1, 2023 and August 17, 2023, the Company purchased two convertible notes issued by DigiTrax Entertainment Inc. (the “DigiTrax”) for an aggregated of $1,000,000 (the “DigiTrax Convertible Notes”). Each DigiTrax Convertible Note will be due on one year after the original issuance (the “DigiTrax Convertible Note Maturity Date”). The Company has the right to receive interest on the aggregate unconverted and then outstanding principal amount of these notes at the rate of 10% per annum. Accrued and unpaid interest will be due and payable on conversion, repayment, redemption, maturity or default. At any time (after six months) after the issuance until the notes are no longer outstanding, the notes shall be convertible, in whole or part, into shares of common stock of DigiTrax at a price of $1.4 per share. In the event DigiTrax consummates a public offering of any capital stock and is able to receive gross proceeds of at least $10,000,000 (“Qualified Offering”) prior to the DigiTrax Convertible Note Maturity Date and there’s no event of default, all then outstanding principal and accrued but unpaid interest under the DigiTrax Convertible Notes should convert into the number of fully paid and nonassessable shares of DigiTrax common stock based on the lesser of (i) $1.4 per share, or (ii) seventy percent (70%) of the price per share of DigiTrax common stock that is subject to the Qualified Offering.

On June 2, 2023 and August 17, 2023, the Company purchased two convertible notes issued by Liquid Marketplace Corp. (the “Liquid”) for an aggregated of $1,500,000 (the “Liquid Convertible Notes”). Each Liquid Convertible Note will be due on one year after the original issuance (the “Liquid Convertible Note Maturity Date”). The Company has the right to receive interest on the aggregate unconverted and then outstanding principal amount of these notes at the rate of 8% per annum. Accrued and unpaid interest will be due and payable on conversion, repayment, redemption, maturity or default. At any time after the issuance until the notes are no longer outstanding, the notes shall be convertible, in whole or part, into shares of common stock of Liquid at a price of $0.25 per share. In the event Liquid consummates a public offering of any capital stock and is able to receive gross proceeds of at least $10,000,000 (“Qualified Offering”) prior to the Liquid Convertible Note Maturity Date and there’s no event of default, all then outstanding principal and accrued but unpaid interest under the Liquid Convertible Notes should convert into the number of fully paid and nonassessable shares of Liquid common stock based on the lesser of (i) $0.25 per share, or (ii) seventy percent (70%) of the price per share of Liquid common stock that is subject to the Qualified Offering.

The Company evaluated the terms of the DigiTrax Convertible Notes and the Liquid Convertible Notes according to ASC 320 and concluded that these notes should be classified as an available-for-sale security and measured at fair value.

As of December 31, 2024, the DigiTrax Convertible Notes were due and extended to May 31, 2025 and August 17, 2025, respectively, with the same terms and conditions as set forth in the original notes, as agreed by the Company and DigiTrax. The Company evaluated the recoverability of the aggregated $1,000,000 DigiTrax Convertible Notes according to ASC 326 and concluded that, the DigiTrax Convertible Notes is more likely than not that it will be uncollectible. Additionally, DigiTrax is not a public company, and its stock has little to no value. The Company recorded $1,000,000 impairment loss on the DigiTrax Convertible Notes in the accompanying statement of operations, for the year ended December 31, 2024. For the year ended December 31, 2024, the Company reversed $48,219 unrealized gains on the fair value changes of the DigiTrax Convertible Notes, that was previously recognized for the year ended December 31, 2023, from the other comprehensive income. Up to the date of the consolidated financial statements were issued, there’s no evidence indicating that the fair value of DigiTrax Convertible Notes increased.

As of December 31, 2024, the Liquid Convertible Notes were due, but the Company failed to collect funds from Liquid. The Company evaluated the recoverability of the aggregated $1,500,000 Liquid Convertible Notes according to ASC 326 and concluded that, it’s more likely than not that the Liquid Convertible Notes will be uncollectible. Additionally, Liquid is not a public company, and its stock has little to no value. The Company recorded $1,500,000 impairment loss on the Liquid Convertible Notes in the accompanying statement of operations, for the year ended December 31, 2024. For the year ended December 31, 2024, the Company reversed $53,808 unrealized gains on the fair value changes of the he Liquid Convertible Notes, that was previously recognized for the year ended December 31, 2023, from the other comprehensive income. Up to the date of the consolidated financial statements were issued, there’s no evidence indicating that the fair value of Liquid Convertible Notes increased.

For the year ended December 31, 2024, the Company reversed unrealized gains on the fair value changes of these notes amounted to $102,027 in other comprehensive income in relation to above convertible notes in the consolidated statements of operations and comprehensive loss. For the year ended December 31, 2023, the Company recorded unrealized gains on the fair value changes of these notes amounted to $102,027 in other comprehensive income in relation to above convertible notes in the accompanying consolidated statements of operations and comprehensive loss.

As of December 31, 2024 and 2023, the balance of the convertible notes was $nil and $2,602,027, respectively.