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Notes Payable – Unrelated Parties
 12 Months Ended
Dec. 31, 2024
Nonrelated Party [Member]  
Defined Benefit Plan Disclosure [Line Items]  
Notes Payable – Unrelated Parties

7. Notes Payable – Unrelated Parties

 

Summary of Notes Payable to Unrelated Parties

 

The table below summarizes all notes payable at December 31, 2024 and 2023, respectively, other than the related party notes disclosed in Note 8 “Notes Payable - Related Parties.”

 

   December 31, 2024   December 31, 2023 
Notes payable – “2022 Unrelated Notes”  $807,331   $2,364,500 
Less unamortized debt issuance costs   (25,395)   (155,258)
Less current portion   (781,936)   - 
Long-term portion of notes payable  $-   $2,209,242 

 

The principal terms of the 2022 Unrelated Notes, which are subordinated notes, as of December 31, 2024 are as follows:

 

Issue Date  Interest Rate   Interest Due  Principal Due
April 1, 2022   12%  Quarterly  December 31, 2025

 

Future minimum principal payments of the Notes Payable to Unrelated Parties of $807,331 are due on December 31, 2025. As of December 31, 2024 and 2023, accrued interest for these notes payable with the exception of the related party notes in Note 8, “Notes Payable - Related Parties,” was $0. As of December 31, 2024 and 2023, unamortized deferred financing costs were reflected within short term and long term liabilities, respectively, on the consolidated balance sheets, netted with the corresponding notes payable balance.

 

In July 2024, a principal amount of $250,000 of the 2022 Unrelated Notes were sold by the unrelated noteholder to related parties at face value. See Note 8.

 

With respect to all notes outstanding (other than the notes to related parties), interest expense, including the amortization of debt issuance costs and debt discount for the years ended December 31, 2024 and 2023 was $315,133 and $514,480, respectively.

 

2022 Unrelated Notes

 

On April 1, 2022, we sold $2,364,500 in 12% Subordinated Notes (“2022 Unrelated Notes”) to unrelated accredited investors. 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.