Quarterly report pursuant to Section 13 or 15(d)

Debt

v3.24.3
Debt
 9 Months Ended
Sep. 30, 2024
Debt Disclosure [Abstract]  
Debt Debt
The Company’s convertible debt consists of the following:
As of December 31, 2023
Total principal value of convertible note - related party, net of discount $ 5,000,000 
Unamortized debt discount (610,749)
Unamortized debt issuance costs (17,253)
Carrying value of total convertible debt - related party $ 4,371,998 
Convertible Note - Related Party
On August 15, 2023, the Company entered into a secured note and warrant purchase agreement (the "Secured Note and Warrant Purchase Agreement") with MFDI, LLC (“MFDI”), pursuant to which the Company issued to MFDI a $5,000,000 secured convertible promissory note (the "Convertible Note") and a warrant to purchase 340,000 shares of common stock on August 18, 2023 (the "Convertible Note Financing") (See Note 4). The Convertible Note had an interest rate of 10% per annum and had a fixed conversion rate of $5.16.
On August 8, 2024, MFDI exercised the conversion option under the Convertible Note and converted the full principal balance of $5,000,000 under the Convertible Note. This conversion resulted in the issuance of 968,973 shares of the Company's common stock and the payment of accrued interest in cash, thereby fully satisfying the Company's debt obligations to MFDI.
Accrued interest was payable quarterly within 30 days of the last day of each calendar quarter. The debt discounts related to the warrants, and debt issuance costs, were amortized over the term of the Convertible Note using the effective interest rate method. Amortization of the debt discount is recognized as non-cash interest expense in Other (income) expense within the Consolidated Statements of Operations. Through the date of conversion, the Convertible Note is classified as Level 2 of the fair value hierarchy model based on market prices that can be corroborated with observable market data for the Company's common stock.
For the three and nine months ended September 30, 2024, the effective interest rate on the Convertible Note was 31.39%.
Interest Expense (Income)
The Company’s interest expense consists of the following:
Three Months Ended
September 30,		 Nine Months Ended
September 30,
2024 2023 2024 2023
Related party interest expense – stated rate $ 53,425  $ 60,274  $ 302,741  $ 76,227 
Insurance premium loan payable – stated rate —  2,162  —  5,764 
Legal judgment interest (income) expense (384,897) (23,320) (234,751) 158,851 
Bond premium 59,929  59,930  59,929  59,930 
Premium on irrevocable letter of credit 69,297  69,861  69,297  69,861 
Other interest expense —  —  —  3,102 
Non-cash interest expense:
Amortization of debt discount 108,417  99,587  582,550  99,587 
Amortization of transaction costs 3,063  2,813  16,456  2,813 
$ (90,766) $ 271,307  $ 796,222  $ 476,135