NOTE 5 –CONVERTIBLE PROMISSORY NOTES

Convertible Notes Payable

In the fourth quarter of 2021, the Company issued a total of $605,000 in convertible notes payable, the total principal and accrued interest of which was converted into a total of 186,601 shares of common stock as of March 31, 2023. The convertible notes were to mature on December 31, 2023, and included a 6% simple interest rate per annum payable upon maturity. In addition to the notes payable, each holder received a warrant for the purchase of shares of common stock with a purchase price of $24.00, which expired in 2022. In accordance with accounting standards, the warrants were valued using a Black Scholes Model and the relative fair value of the warrant was applied against the convertible note for a debt discount of $72,600.

In the fourth quarter of 2022, two note holders converted $132,932 of principal and interest on their notes into 22,155 shares of common stock, at a reduced conversion price approved by the Board of $6.00. In the first quarter of 2023, the remaining holders converted $519,712 of principal and interest on their notes into 148,621 shares of common stock, at a reduced conversion price approved by the Board of $3.50, and the two holders who converted in 2022 received an additional 15,825 shares to “make whole” their prior conversion at a higher price. Due to the inducement to the reduced conversion price, the Company recorded $397,937 of inducement interest expense to other income and expenses. The fair value of the shares issued for the conversion as of March 31, 2023 was $594,484 based on the stock price of $4.00 as of March 31, 2023.

During the three-month periods ended March 31, 2023 and 2022, the Company recorded interest expense related to the amortization of the discount of $36,300 and $9,075, respectively. As of March 31, 2023 and December 31, 2022, unamortized debt discount was $0 and $36,300, respectively.