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Notes Payable - Related Parties
 12 Months Ended
Dec. 31, 2023
Related Party [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Notes Payable - Related Parties

9. Notes Payable - Related Parties

 

Summary of Notes Payable to Related Parties

 

The table below summarizes all notes payable to related parties at December 31, 2023 and 2022:

 

   December 31, 2023   December 31, 2022 
Notes payable – “2022 Related Note”  $600,000   $600,000 
Less unamortized debt issuance costs   (39,398)   (70,916)
Long-term portion of notes payable  $560,602   $529,084 

 

Future minimum principal payments of the 2022 Notes to related parties are as follows:

 

As of December 31,  Amount 
2025  $600,000 
Total  $600,000 

 

As of December 31, 2023 and 2022, accrued interest for these notes payable – related parties was $0. As of December 31, 2023 and 2022, unamortized deferred financing costs were reflected within long term liabilities on the consolidated balance sheets.

 

With respect to all notes payable – related parties outstanding, interest expense, including the amortization of debt issuance costs, for the years ended December 31, 2023 and 2022 was $103,518 and $77,638, respectively.

 

2022 Related Note

 

On April 1, 2022, we issued a 12% Subordinated Note with a principal amount of $600,000 (the “2022 Related Note”) to Robert Taglich (holding more than 5% beneficial interest in the Company’s Shares). The entire outstanding principal and unpaid interest of the 2022 Related Note was initially due and payable on March 30, 2025. On March 13, 2024, we agreed with the note holder to amend the Related Notes to extend the maturity date to December 31, 2025, Interest on the 2022 Related Note accrues at the rate of 12% per annum, payable quarterly in cash, beginning on September 30, 2022. Any accrued but unpaid quarterly installment of interest will accrue interest at the rate of 14.0% per annum. Any overdue principal and accrued and unpaid interest at the maturity date will accrue a mandatory default penalty of 20% of the outstanding principal balance and an interest rate of 14% per annum from the maturity date until paid in full. We used a portion of the net proceeds from the private placement offering to finance the acquisition of Yellow Folder and the remaining net proceeds for working capital and general corporate purposes.