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CONVERTIBLE DEBT
 12 Months Ended
Dec. 31, 2023
CONVERTIBLE DEBT  
CONVERTIBLE DEBT

NOTE 10. CONVERTIBLE DEBT

 

On October and November 2023, we entered into a Securities Purchase Agreement (the “SPA”) with certain accredited investors (collectively, the “Investors”) pursuant to which we agreed to sell and issue to the Investors in a private placement transaction (the “Private Placement”) in one or more closings up to an aggregate principal amount of $5,000,000 of Convertible Notes (the “Notes”).  As of December 31, 2023, we issued and sold an aggregate of $2,600,000 of Notes to certain Investors pursuant to the SPA.

 

In October and November 2023, we  sold and issued pursuant to the  SPA convertible promissory notes (the “Notes”) to purchase an aggregate of 2,080,000 shares of common stock at an exercise price of $1.25 per share in exchange for aggregate gross proceeds of $2,600,000. The Notes mature and are due on the fifth anniversary of the issuance date in October and November of 2028. The Notes bear simple interest at a rate of 12% per annum, payable in equal monthly installments. The Notes are convertible into shares of our Common Stock, at the option of the holder, at a conversion price of $1.25 per share, which shall not exceed $1.55 per share. In addition, we can require Investors to convert the Notes at the then current conversion price at any time after 90 days from the issue date if the Common Stock has a closing bid price of $1.55 per share or higher on any twenty (20) days within a thirty (30) day period of consecutive trading days, or if a “fundamental change” occurs (as defined in the Securities Purchase Agreement). The Notes are unsecured and senior to other indebtedness subject to certain exceptions. Interest expense related to the Notes for the years ended December 31, 2023 and 2022 was $54,892 and $0, respectively.

 

Amortization of deferred financing costs were $10,413 and $0 for the years ended December 31, 2023 and 2022, respectively, which has been included with interest expense on the statement of operations. 

 

Convertible notes consist of the following at:

 

 

 

December 31,

 

 

December 31,

 

 

 

2023

 

 

2022

 

 

 

 

 

 

 

 

Convertible notes

 

$2,600,000

 

 

$-

 

Less: Debt issuance costs

 

 

(312,398)

 

 

-

 

Accumulated amortization

 

 

10,413

 

 

 

-

 

Convertible notes, net

 

$2,298,015

 

 

$-