Note 6 – Notes Payable

In connection with the acquisition of assets from ECC, the Company issued a note payable to the owner of ECC. The note accrued interest at 5% per annum, requires quarterly principal and interest payments of $4,518 and is due on April 15, 2021. At June 30, 2023 and December 31, 2022, the amount outstanding under this note payable was $5,272 and $5,272, respectively. The Company repaid $0 during the six months ended June 30, 2023.

On December 26, 2020, a line of credit held by the company had matured, and based on the terms of the line of credit agreement was converted to a note payable upon demand. The obligation accrues interest at the rate of $10.89 per day until the bank receives full payment. As of June 30, 2023, the balance owed by the Company was $0.

On May 5, 2022, the Company received a loan in connection with the issuance of stock warrants in the amount of $750,000. The loan has terms of 12 months and accrues interest at 5% per annum. As part of the issuance of the loan, the company identified debt discounts related to the warrants issued, the incentive shares issued as discussed at Note 10, the beneficial conversion feature of the debt, and the expenses paid as part of the issuance. Total debt discounts recorded as of the date of the note was $550,538. As of June 30, 2023, and pursuant to the down-round provision of the note and associated warrants, the Company reevaluated the beneficial conversion feature which resulted in additional debt discount recorded of $119,947. The total remaining unamortized debt discount on this note as of June 30, 2023, is $0. Since the note matured during the period on May 5, 2023, and the note has not been satisfied, the Company will begin accruing interest at the default rate of 16%.

On October 10, 2022, the Company received a loan in connection with the issuance of stock warrants in the amount of $375,000. The loan has terms of 12 months and accrues interest at 5% per annum. As part of the issuance of the loan, the company identified debt discounts related to the warrants issued, the beneficial conversion feature of the debt, and the expenses paid as part of the issuance. Total debt discounts recorded as of the date of the note was $200,488. At June 30, 2023 and pursuant to the down-round provision of the note and associated warrants, the Company reevaluated the beneficial conversion feature recorded which resulted in additional debt discount recorded of $206,788. The total remaining unamortized debt discount on this note as of June 30, 2023, is $192,023.

The total debt discount amortization recorded on the Company’s notes for the six months ended June 30, 2023, was $616,611.

Future maturities of all notes payable, net of any debt discounts as of June 30, 2023, are as follows: