NOTE 9 - NOTES PAYABLE

As of September 30, 2023 and December 31, 2022, the Company had an advance from a third party. The advance bears no interest and is due on demand. The balance outstanding as of September 30, 2023 and December 31, 2022 is $21,480.

On September 9, 2021, the Company issued an unsecured promissory note payable to one third party for $200,000 with principal and interest due June 8, 2022, with a stated interest rate of 25% per annum. The balance outstanding as of September 30, 2023 and December 31, 2022 is $200,000. The interest expense during the three months ended September 30, 2023 and 2022 were $12,602. The interest expense during the nine months ended September 30, 2023 and 2022 were $37,397. If the Company fails to make any payment due under the terms of the promissory note, the Company shall issue a warrant to the third party to which the number of common shares that the third party has the right to purchase equals 48,309 common shares. The warrant shall have a term of 3 years with an exercise price of $4.14 and shall be equitably adjusted to offset the effect of any stock splits and similar events. On June 8, 2022, the Company issued the warrant that entitles the third party to purchase 48,309 common shares due to the loan default. The fair value of the warrant on June 8, 2022 was $86,821, which the Company recognized as interest expense.

On October 6, 2022, the Company issued an unsecured promissory note payable to a third party for $100,000 with principal and interest due October 6, 2023, with a stated interest rate of 12.5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $3,125. The balance outstanding as of September 30, 2023 and December 31, 2022 was $100,000. The interest expense during the three months ended September 30, 2023 was $3,150.  The interest expense during the nine months ended September 30, 2023 was $9,349. The Company made an interest payment of $9,375 during the nine months ended September 30, 2023. If the Company fails to make any payment due under the terms of the promissory note, the stated interest rate of the note shall be increased to 25%. As additional consideration for the loan the Company issued 16,500 shares of common stock and valued at $31,350, which was recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $7,902 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $23,448 of debt discount as interest expense.

On January 25, 2023, the Company issued an unsecured promissory note payable to a third party for $50,000 with principal and interest due January 25, 2024, with a stated interest rate of 12.5% per annum. Under the terms of the note the Company shall pay quarterly interest payments of $1,563. The balance outstanding as of September 30, 2023 was $50,000. The interest expense during the three months ended September 30, 2023 was $1,576.  The interest expense during the nine months ended September 30, 2023 was $4,264. The Company made an interest payment of $3,125 during the nine months ended September 30, 2023. If the Company fails to make any payment due under the terms of the promissory note, the stated interest rate of the note shall be increased to 20%. As additional consideration for the loan the Company issued 4,285 shares of common stock and valued at $6,000, which was recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $1,513 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $4,093 of debt discount as interest expense.

On September 6, 2023, the Company issued an unsecured promissory note payable to one third party for $150,000 with principal and interest due September 6, 2024, with a stated interest rate of 8% per annum. The third party has the option to select the repayment in cash or in stock of the Company at $2.00 per share. The balance outstanding as of September 30, 2023 was $150,000. The interest expense during the three months ended September 30, 2023 was $822.  The interest expense during the nine months ended September 30, 2023 was $822. If the Company fails to make any payment due under the terms of the promissory note, the interest rate shall increase to 15% per annum. In connection with the issuance of the promissory note, the Company issued the warrant that entitles the third party to purchase 150,000 common shares. The warrant shall have a term of three years with an exercise price of $2.00 and shall be equitably adjusted to offset the effect of any stock splits and similar events. The Company allocated the proceeds based on the relative fair value of the debt and the warrants, resulting in the recognition of $88,820 of debt discount on such promissory note. As additional consideration for the debt, the Company issued 18,000 shares of common stock valued at $30,240, which was also recognized as debt discount. During the three months ended September 30, 2023, the Company amortized $8,155 of debt discount as interest expense. During the nine months ended September 30, 2023, the Company amortized $8,155 of debt discount as interest expense.

The interest expense during the three months ended September 30, 2023 and 2022 were $36,883 and $13,624, respectively. The interest expense during the nine months ended September 30, 2023 and 2022 were $90,412 and $127,226, respectively. As of September 30, 2023 and December 31, 2022, the accumulated interest on notes payable was $1,246,085 and $1,206,753, respectively, and was included in accounts payable and accrued expenses on the balance sheet.

The outstanding notes payables as of September 30, 2023 and December 31, 2022 were summarized as below: