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Note 5 - Convertible Note
6 Months Ended
Jun. 30, 2025
Notes to Financial Statements  
Convertible Debt [Text Block]

Note 5 Convertible Note

 

The Company had a Convertible Note outstanding with Alpha Capital Anstalt (“Alpha”) which was due January 8, 2025 (the “Note”) and was considered in default. The Note was a result of an exchange agreement executed on February 8, 2024 in which the parties agreed to exchange the then outstanding promissory note into a convertible note. The Note accrued interest at 12% per annum and would increase to the lesser of 18% or the maximum rate permitted under applicable law upon an Event of Default as defined under the Note. 

 

 

During the six months ended June 30, 2025, the conversion price of the Note was reduced from $1.10 to $0.8294 pursuant to dilution protection provisions and due to the sale of Series F preferred stock and Series F warrants with a conversion price and exercise price of $0.8294 (see Note 8). The Company recognized a loss on debt extinguishment of $125,242 for the incremental value of the conversion feature due to the reduced conversion price. The incremental value was determined using a Black-Scholes pricing model pre and post modification and the following inputs: expected term 0.50 years, risk free rate of 4.27%, volatility of 203.53%, and dividend rate of 0.00%.

 

During the six months ended June 30, 2024, the conversion price of the Note was reduced from $62.50 to $30.00 pursuant to dilution protection provisions and due to the reduction in warrant exercise prices to $30.00 to induce exercise (see Note 7). The Company recognized in interest expense the amount of $3,488,851 for the incremental value of the conversion feature due to the reduced conversion price. The incremental value was determined using a Black-Scholes pricing model pre and post modification and the following inputs: expected term 0.92 years, risk free rate of 4.83%, volatility of 89.60%, and dividend rate of 0.00%.

 

During the  six months ended June 30, 2025 and 2024, Alpha converted $646,994 and $0 of outstanding principal and accrued interest into 780,112  and 0 shares of Common Stock at an average conversion rate of $0.8294 and $0, respectively. During the six months ended June 30, 2025 and 2024, Alpha converted $1,416,995 and $100,000 of outstanding principal and accrued interest into 1,480,112 and 1,597 shares of Common Stock at an average conversion rate of $0.9573 and $62.62, respectively. .

 

As of June 30, 2025 and December 31, 2024, the outstanding principal and accrued interest on the Note was $0 and $8,612 and $1,333,333 and $47,123, respectively.

 

For the six months ended June 30, 2025 and 2024, we recognized interest expense on the Note of $92,273 and $210,325, respectively.