Convertible Debentures | 7. Convertible Debentures As of March 31, 2024 and December 31, 2023, the Company had outstanding the following convertible debentures: March 31, December 31, 2024 2023 Convertible promissory note, Jeffrey Gardner, 18% interest, unsecured, matured September 15, 2021, due on demand $ 125,000 $ 125,000 Convertible promissory note, James Marsh, 18% interest, unsecured, matured September 15, 2021, due on demand 125,000 125,000 Convertible promissory note issued to Roger Ponder, 10% interest, unsecured, matures March 31, 2024 23,894 23,894 Convertible promissory note issued to Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025, net of debt discount of $221,302 and $282,945, respectively 478,698 417,055 Convertible promissory note issued to Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025, net of debt discount of $142,266 and $181,894, respectively 307,734 268,106 Convertible promissory note issued to Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024, net of debt discount of $272,148 and $407,890, respectively 238,964 36,555 Convertible promissory note issued to FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024, net of debt discount of $137,889 and $206,666, respectively 117,666 15,556 Convertible promissory note issued to Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025, net of debt discount of $254,085 95,915 - Convertible promissory note issued to 1800 Diagonal Lending LLC, 12% interest, unsecured, matures November 15, 2024, net of debt discount of $17,654 141,069 - Total 1,653,940 1,011,166 Less: Current portion of convertible debentures, net of debt discount/premium (1,653,940 ) (326,005 ) Convertible debentures, net of current portion, net of debt discount $ - $ 685,161 The Company’s convertible debentures have an effective interest rate range of 11.2% to 136.4%. Convertible promissory note, Jeffrey Gardner, 18% interest, unsecured, due on demand On June 15, 2021 the Company issued to Jeffrey Gardner an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the 2021 merger transaction. The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note is due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share. On September 15, 2021, this note matured and is now due on demand. Additionally, the interest rate increased to 18% per annum. As of March 31, 2024, the Company owed $125,000 pursuant to this agreement. Convertible promissory note, James Marsh, 18% interest, unsecured, due on demand On June 15, 2021 the Company issued to James Marsh an unsecured convertible promissory note in the aggregate principal amount of $125,000 in connection with the 2021 merger transaction. The interest on the outstanding principal due under the note accrues at a rate of 6% per annum. All principal and accrued but unpaid interest under the note are due on September 15, 2021. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.075 per share. On September 15, 2021, this note matured and is now due on demand. Additionally, the interest rate increased to 18% per annum. As of March 31, 2024, the Company owed $125,000 pursuant to this agreement. Convertible promissory note, Roger Ponder, 10% interest, unsecured, matures August 31, 2022 On June 15, 2021, in connection with the 2021 merger transaction, the Company assumed High Wire’s convertible promissory note issued to Roger Ponder. The note was originally issued on August 31, 2020 in the principal amount of $23,894. Interest accrues at 10% per annum. All principal and accrued but unpaid interest under the note are due on August 31, 2022. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.06 per share, subject to adjustment based on the terms of the note. The embedded conversion option does not qualify for derivative accounting. As a result of the conversion price being fixed at $0.06, the note has a conversion premium of $58,349, and the fair value of the note is $19,000. On September 30, 2022, the Company and the holder of the note mutually agreed to extend the maturity date to December 31, 2022. The terms of the note were unchanged. On December 31, 2022, the Company and the holder of the note mutually agreed to extend the maturity date to March 31, 2023. The terms of the note were unchanged. On March 31, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to June 30, 2023. The terms of the note were unchanged. On June 30, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to September 30, 2023. The terms of the note were unchanged. On September 30, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to December 31, 2023. The terms of the note were unchanged. On December 31, 2023, the Company and the holder of the note mutually agreed to extend the maturity date to March 31, 2024. The terms of the note were unchanged. On March 31, 2024, the Company and the holder of the note mutually agreed to extend the maturity date to June 30, 2024. The terms of the note were unchanged. As of March 31, 2024, the Company owed $23,894 pursuant to this agreement. Securities Purchase Agreement – September 2023 On September 25, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company may issue to accredited investors (the “Investors”) 18% Senior Secured Convertible Promissory Notes having an aggregate principal amount of up to $5,000,000 (the “Notes”) and Common Share Purchase Warrants (the “Warrant”) to purchase up to 1,000,000 shares of common stock (“Common Stock”) of the Company per $100,000 of principal amount of the Notes (the “Warrant Shares”). The Notes mature 18 months after issuance (the “Maturity Date”), bear interest at a rate of 18% per annum and are convertible into Common Stock (the “Conversion Shares” and, together with the Warrant Shares, the “Underlying Shares”), at the Investor’s election at any time after the Maturity Date, at an initial conversion price equal to $0.10, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. The Company may prepay all, but not less than all, of the then outstanding principal amount of the Notes by paying to the Investor an amount equal to the product of (i) the sum of (a) the outstanding principal amount of the Notes, plus (b) accrued and unpaid interest hereon, plus (c) all other amounts, costs, expenses and liquidated damages due in respect of the Notes, multiplied by (ii) (x) 1.18 if the Company prepays the Notes during the first month following the original issue date and (y) if the Company prepays thereafter, 1.18 minus 0.01 for every month following the closing until the Maturity Date. The Notes contain a number of customary events of default. The Notes constitute senior secured indebtedness of the Company, subject to a preexisting senior lien, and are guaranteed by all existing or future formed, direct and indirect, domestic subsidiaries of the Company (the “Guarantors”) pursuant to a subsidiary guarantee (the “Subsidiary Guarantee”) with the collateral agent for the Investor (the “Agent”). On September 25, 2023, the Company, the Investor, the Guarantors and the Agent also entered into a security agreement (the “Security Agreement”) pursuant to which the Notes are secured by a lien in, and security interest upon, and a right of set-off against all of its right, title and interest of whatsoever kind and nature in and to, all assets of the Company and the Guarantors, subject to customary and mutually agreed permitted liens. The Warrant is exercisable at an initial exercise price of $0.15 per share for a term ending on the 5-year anniversary of the date of issuance. The exercise price of the Warrant is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. As of March 31, 2024, the Company had issued an aggregate of $1,220,000 of principal and an aggregate of 12,200,000 warrants to debt holders in connection with the Purchase Agreement. Additionally, the placement agent for the Purchase agreement receives 7% cash and 7% warrant compensation on amounts closed on pursuant to the agreement. As of March 31, 2024, the placement agent had received an aggregate of 854,000 warrants. For information on the debt issued under the agreement, refer to the “Convertible promissory note, Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025” and “Convertible promissory note, Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025” sections of this note, along with the “Convertible promissory note, Mark Porter, 18% interest, secured, matures March 25, 2025” section of Note 5, Loans Payable to Related Parties. Convertible promissory note, Herald Investment Management Limited, 18% interest, secured, matures March 25, 2025 On September 25, 2023, the Company issued to Herald Investment Management Limited a senior subordinated secured convertible promissory note in the aggregate principal amount of $700,000. The Company received cash of $669,687 and recorded a debt discount of $30,313. The interest on the outstanding principal due under the note accrues at a rate of 18% per annum. All principal and accrued but unpaid interest under the note are due on March 25, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share. Additionally, in connection with the note, the Company issued Herald Investment Management Limited a warrant to purchase 7,000,000 shares of the Company’s common stock at an exercise price of $0.15 per share. These warrants expire on September 25, 2028. The warrants, including those issued to the placement agent, had a relative fair value of $318,523, which resulted in an additional debt discount of $318,523. The amount is also included within additional paid-in capital. As of March 31, 2024, the Company owed $700,000 pursuant to this note and will record accretion equal to the debt discount of $221,302 over the remaining term of the note. Convertible promissory note, Kings Wharf Opportunities Fund, LP, 18% interest, secured, matures March 25, 2025 On September 25, 2023, the Company issued to Kings Wharf Opportunities Fund, LP a senior subordinated secured convertible promissory note in the aggregate principal amount of $450,000. The Company received cash of $430,513 and recorded a debt discount of $19,487. The interest on the outstanding principal due under the note accrues at a rate of 18% per annum. All principal and accrued but unpaid interest under the note are due on March 25, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share. Additionally, in connection with the note, the Company issued Kings Wharf Opportunities Fund, LP a warrant to purchase 4,500,000 shares of the Company’s common stock at an exercise price of $0.15 per share. These warrants expire on September 25, 2028. The warrants, including those issued to the placement agent, had a relative fair value of $204,765 which resulted in an additional debt discount of $204,765. The amount is also included within additional paid-in capital. As of March 31, 2024, the Company owed $450,000 pursuant to this note and will record accretion equal to the debt discount of $142,266 over the remaining term of the note. Securities Purchase Agreement – December 2023 On December 7, 2023, the Company entered into a securities purchase agreement pursuant to which the Company may issue to accredited investors (the “Investors”) 12% senior promissory notes having an aggregate principal amount of up to $2,250,000, up to 4,780,000 shares of common stock as a commitment fee (the “commitment shares”), common share purchase warrants for the purchase of up to 5,400,000 shares of common stock at an initial price per share of $0.125 (the “First Warrants”), as well as common share purchase warrants for the purchase of up to 37,500,000 shares of common stock at an initial price per share of $0.001 (the “Second Warrants”). The notes have a term of one year from the date of issuance. The First Warrants have a term of five years from the date of issuance. The Second Warrants have a term of five years from the date of a triggering event as defined in the terms of the agreement. As of March 31, 2024, the Company had issued an aggregate of $1,016,667 of principal, an aggregate of 2,159,850 commitment shares, an aggregate of 2,439,999 First Warrants, and an aggregate of 16,944,443 Second Warrants to debt holders in connection with the agreement. For information on the debt issued under the agreement, refer to the “Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024”, and “Convertible promissory note, FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024”, and “Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025” sections of this note. In connection with the issuances of debt discussed below, the Company issued 321,990 First Warrants to a broker. Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures December 7, 2024 On December 7, 2023, the Company issued to Mast Hill Fund, L.P. a senior convertible promissory note in the aggregate principal amount of $444,445. The Company received cash of $357,000, net of legal fees of $43,000, which resulted in an original issue discount of $44,445. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on March 7, 2024 and principal on June 7, 2024, with all remaining amounts under the note due on December 7, 2024. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share. Additionally, in connection with the note, the Company issued Mast Hill Fund, L.P. 944,197 commitment shares, 1,066,666 First Warrants with an exercise price of $0.125 which expire on December 7, 2028, and 7,407,407 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement. On December 7, 2023, the Company issued 944,197 commitment shares to Mast Hill Fund, L.P. The shares had a fair value of $80,713, which resulted in an additional debt discount of $80,713. The warrants qualified for warrant liability accounting under ASC 480 “ Distinguishing Liabilities from Equity A total of $80,703 was recorded to additional paid-in capital in connection with the issuance of debt and warrants. On January 1, 2024, $66,667 was added to the principal balance of the note as the Company had not yet filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. This amount was recorded as a penalty fee on the unaudited condensed consolidated statement of operations for the three months ended March 31, 2024. As of March 31, 2024, the Company owed $511,112 pursuant to this note and will record accretion equal to the debt discount of $272,148 over the remaining term of the note. Convertible promissory note, FirstFire Global Opportunities Fund, LLC, 12% interest, unsecured, matures December 11, 2024 On December 11, 2023, the Company issued to FirstFire Global Opportunities Fund, LLC a senior convertible promissory note in the aggregate principal amount of $222,222. The Company received cash of $178,500, net of legal fees of $21,500, which resulted in an original issue discount of $22,222. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on March 11, 2024 and principal on June 11, 2024, with all remaining amounts under the note due on December 11, 2024. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share. Additionally, in connection with the note, the Company issued FirstFire Global Opportunities Fund, LLC 472,098 commitment shares, 533,333 First Warrants with an exercise price of $0.125 which expire on December 11, 2028, and 3,703,703 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement. On December 11, 2023, the Company issued 472,098 commitment shares to FirstFire Global Opportunities Fund, LLC. The shares had a fair value of $38,540, which resulted in an additional debt discount of $38,540. The warrants qualified for warrant liability accounting under ASC 480 “ Distinguishing Liabilities from Equity A total of $38,535 was recorded to additional paid-in capital in connection with the issuance of debt and warrants. On January 1, 2024, $33,333 was added to the principal balance of the note as the Company had not yet filed its Quarterly Report on Form 10-Q for the quarter ended September 30, 2023. This amount was recorded as a penalty fee on the unaudited condensed consolidated statement of operations for the three months ended March 31, 2024. As of March 31, 2024, the Company owed $255,555 pursuant to this note and will record accretion equal to the debt discount of $137,889 over the remaining term of the note. Convertible promissory note, Mast Hill Fund, L.P., 12% interest, unsecured, matures January 11, 2025 On January 11, 2024, the Company issued to Mast Hill Fund, L.P. a senior convertible promissory note in the aggregate principal amount of $350,000. The Company received cash of $281,150, net of legal fees of $33,850, resulting in an original issue discount of $35,000. The interest on the outstanding principal due under the note accrues at a rate of 12% per annum. Under the terms of the agreement the Company will begin paying accrued interest on April 11, 2024 and principal on July 11, 2024, with all remaining amounts under the note due on January 11, 2025. The note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.10 per share. Additionally, in connection with the note, the Company issued Mast Hill Fund, L.P. 743,555 commitment shares, 840,000 First Warrants with an exercise price of $0.125 which expire on January 11, 2029, and 5,833,333 Second Warrants with an exercise price of $0.001 which expire five years from the date of a triggering event as defined in the terms of the agreement. On January 11, 2024, the Company issued 743,555 commitment shares to Mast Hill Fund, L.P. The shares had a fair value of $56,286. The warrants qualified for warrant liability accounting under ASC 480 “ Distinguishing Liabilities from Equity A total of $56,279 was recorded to additional paid-in capital in connection with the issuance of debt and warrants. As of March 31, 2024, the Company owed $350,000 pursuant to this note and will record accretion equal to the debt discount of $254,085 over the remaining term of the note. Convertible promissory note, 1800 Diagonal Lending LLC, 12% interest, unsecured, matures November 15, 2024 On January 24, 2024, the Company issued to 1800 Diagonal Lending LLC an unsecured convertible promissory note in the aggregate principal amount of $178,250. The Company received cash of $150,000, net of legal fees of $5,000, resulting in an original issue discount of $23,250. A one-time interest charge of 12%, or $21,390, was applied on the issuance date. The principal and accrued interest is to be paid in nine equal payments beginning on March 15, 2024, with the final principal and accrued interest payment due on November 15, 2024. In the event of a default, the note is convertible into shares of the Company’s common stock at a fixed conversion price of $0.07 per share. During the three months ended March 31, 2024, the Company paid $19,528 of the original balance under the agreement. As of March 31, 2024, the Company owed $158,722 pursuant to this note and will record accretion equal to the debt discount of $17,654 over the remaining term of the note. |