Titan Environmental Solutions Inc 10-Q for FY2024 Q2

Titan Environmental Solutions Inc. (TESI)

10-Q 2024-08-19 For: 2024-06-30

Added on April 06, 2026

About this 10-Q

Titan Environmental Solutions Inc filed this 10-Q on August 19, 2024, covering the quarter ended June 30, 2024 (FY2024 Q2).

Headline figures

Quarter ended June 30, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.66M; up 45.6% from $1.83M a year earlier
Net loss: $2.35M; compared with a net loss of $22.9M a year earlier
Diluted EPS: -$0.03; compared with -$0.67 a year earlier

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Nevada		30-0580318
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

300 E. Long Lake Road, Suite 100A Bloomfield Hills, Michigan		48304
(Address of Principal Executive Office)		(Zip Code)

Large Accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller reporting company ☒

	Emerging growth company ☐

		Page
PART I – Financial Information

Item 1.	Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45

Item 3	Quantitative and Qualitative Disclosures about Market Risk	59

Item 4	Controls and Procedures	59

PART I – Financial Information

Item 1.	Legal Procedures	60

Item 1A.	Risk Factors	60

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60

Item 3.	Defaults Upon Senior Securities	60

Item 4.	Mine Safety Disclosures	60

Item 5.	Other Information	60

Item 6.	Exhibits	61

SIGNATURES		62

	●	our prospects, including our future business, revenues, expenses, net income, earnings per share, gross margins, profitability, cash flows, cash position, liquidity, financial condition and results of operations, our targeted growth rate, our goals for future revenues and earnings, and our expectations about realizing the revenues in our backlog and in our sales pipeline;

	●	our ability to successfully pursue strategic acquisitions and integrate acquired businesses;

	●	our ability to hire additional personnel and to manage the growth of our business;

	●	our ability to continue as a going concern;

	●	environmental and other regulations, including developments related to emerging contaminants, gas emissions, renewable energy and environmental, social and governance (“ESG”) performance and disclosure;

	●	significant environmental, safety or other incidents resulting in liabilities or brand damage;

	●	failure to obtain and maintain necessary permits due to land scarcity, public opposition or otherwise;

	●	diminishing landfill capacity, resulting in increased costs and the need for disposal alternatives;

	●	failure to attract, hire and retain key team members and a high quality workforce;

	●	increases in labor costs due to union organizing activities or changes in wage and labor related regulations;

	●	disruption and costs resulting from extreme weather and destructive climate events;

	●	public health risk, increased costs and disruption due to a future resurgence of pandemic conditions and restrictions;

	●	macroeconomic conditions, geopolitical conflict and market disruption resulting in labor, supply chain and transportation constraints, inflationary cost pressures and fluctuations in commodity prices, fuel and other energy costs;

	●	increased competition;

	●	pricing actions;

	●	impacts from international trade restrictions;

	●	competitive disposal alternatives, diversion of waste from landfills and declining waste volumes;

	●	weakness in general economic conditions and capital markets, including potential for an economic recession; instability of financial institutions;

	●	adoption of new tax legislation;

	●	shortages of fuel and/or other energy resources;

	●	failure to develop and protect new technology;

	●	failure of technology to perform as expected;

	●	the risks associated with the legislative, judicial, accounting, regulatory, political and economic risks and conditions;

	●	claims, demands and lawsuits to which we are, and may in the future, be subject and the risk that our insurance or indemnities coverage may not be sufficient;

	●	our ability to operate, update or implement our IT systems;

	●	our ability to implement additional finance and accounting systems, procedures and controls in order to satisfy public company reporting requirements;

	●	our ability to obtain additional financing when and as needed;

	●	the potential liquidity and trading of our securities; and

	●	the future trading prices of our common stock and the impact of securities analysts’ reports on these prices.

	Page No.

Consolidated Balance Sheets as of June 30, 2024 (unaudited) and December 31, 2023	6

Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	7

Consolidated Statement of Changes in Mezzanine Equity and Stockholders’ Equity / Members’ Equity for the Three and Six Months Ended June 30, 2024 and 2023 (unaudited)	8

Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (unaudited)	9

Notes to Consolidated Financial Statements (unaudited)	10

	JUNE 30,			DECEMBER 31,
	2024			2023
	(unaudited)
ASSETS

Current Assets:
Cash	$	56,787		$	103,578
Accounts receivable, net of allowance for expected credit losses of $35,252 and $43,016 as of June 30, 2024 and December 31, 2023, respectively		2,087,317			970,629
Other receivables		7,240			7,351
Prepaid expenses and other current assets		149,452			248,932
Inventory		504,930			145,000
Total Current Assets		2,805,726			1,475,490

Property and equipment, net		11,573,580			5,780,747
Intangible assets, net		6,269,813			6,654,030
Goodwill		20,381,882			6,516,915
Other assets		15,668			165,668
Operating lease right-of-use assets, net		557,233			1,582,624
Total Non-current Assets		38,798,176			20,699,984

TOTAL ASSETS	$	41,603,902		$	22,175,474

LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY

LIABILITIES
Current Liabilities:
Accounts payable and accrued expenses	$	7,438,016		$	4,072,958
Customer deposits		612,569			226,671
Accrued payroll and related taxes		258,952			144,326
Derivative liability		-			17,500
Convertible notes payable, net of discounts		3,099,802			2,871,900
Convertible notes payable, net of discounts – related party		775,270			724,250
Convertible notes payable, net of discounts		775,270			724,250
Notes payable, net of discounts and deferred financing costs		3,668,732			3,381,446
Notes payable, net of discounts – related party		1,766,500			530,000
Notes payable, net of discounts		1,766,500			530,000
Finance lease liability, current		29,524			-
Operating lease liabilities, current		222,243			391,547
Shares to be issued		-			50,000
Total Current Liabilities		17,871,608			12,410,598

Notes payable, net of current portion, discounts and deferred financing costs		3,271,180			2,571,215
Notes payable, net of current portion and discounts – related party		2,897,368			603,470
Notes payable, net of current portion and discounts		2,897,368			603,470
Convertible notes payable, net of current portion and discounts		183,231			-
Convertible notes payable, net of current portion and discounts – related parties		61,091			-
Convertible notes payable, net of current portion and discounts		61,091			-
Finance lease liability, net of current portion		67,539
Operating lease liabilities, net of current portion		355,862			1,290,866
Total Non-current Liabilities		6,836,271			4,465,551

Total Liabilities		24,707,879			16,876,149

Commitments and contingencies (Note 16)		-			-

MEZZANINE EQUITY
Series B Redeemable Convertible Preferred Stock, par value $0.0001, 527,792 and 0 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		6,899,967			-

STOCKHOLDERS’ EQUITY
Preferred stock, 25,000,000 shares authorized:
Series A Convertible Preferred Stock, par value $0.0001, 1,397,900 and 630,900 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively		140			63
Preferred Stock value		140			63
Common stock, par value, $0.0001, 400,000,000 shares authorized, 25,386,814 and 15,134,545 shares issued and outstanding as of June 30, 2024 and December 31, 2023		2,539			1,513
Additional paid in capital		165,548,628			155,377,798
Accumulated deficit		(155,555,251	)		(150,080,049	)

Total Stockholders’ Equity		9,996,056			5,299,325

TOTAL LIABILITIES, MEZZANINE EQUITY, AND STOCKHOLDERS’ EQUITY	$	41,603,902		$	22,175,474

	2024			2023			2024			2023
	For the Six Months Ended						For the Three Months Ended
	June 30,						June 30,
	2024			2023			2024			2023
Revenue	$	4,416,933		$	2,961,572		$	2,661,183		$	1,827,245
Cost of Revenues		3,726,129			2,741,058			2,102,973			1,544,103
Gross Profit		690,804			220,514			558,210			283,142

Operating Expenses
Salaries and salary related costs		1,100,042			618,647			613,010			429,330
Stock based compensation		-			5,588,207			-			5,588,207
Professional fees		2,030,556			924,671			1,157,117			729,893
Depreciation and amortization		386,705			248,540			193,839			241,665
General and administrative expenses		771,276			414,052			369,636			282,401
Goodwill impairment		-			15,669,287			-			15,669,287
Total Operating Expenses		4,288,579			23,463,404			2,333,602			22,940,783

OPERATING LOSS		(3,597,775	)		(23,242,890	)		(1,775,392	)		(22,657,641	)

OTHER INCOME (EXPENSE):
Change in fair value of derivative liability		17,500			9,652			-			9,652
Interest expense, net of interest income		(1,244,266	)		(438,832	)		(733,812	)		(359,180	)
Other income (expense), net		211,628			103,421			155,235			103,121
Total other income (expense), net		(1,015,138	)		(325,759	)		(578,577	)		(246,407	)

Provision for income taxes		-			-			-			-
Net loss	$	(4,612,913	)	$	(23,568,649	)	$	(2,353,969	)	$	(22,904,048	)

Deemed dividends attributable to accretion of Series B Preferred Stock to redemption value		(3,958,376	)		-			(3,958,376	)		-
Deemed dividends related to issuance of warrants		(862,289	)		-			-			-
Net loss available to common stockholders	$	(9,433,578	)	$	(23,568,649	)	$	(6,312,345	)	$	(22,904,048	)

Net loss per share
Basic and diluted	$	(0.04	)	$	(0.69	)	$	(0.03	)	$	(0.67	)

Weighted-average common shares outstanding
Basic and diluted		222,067,042			33,959,755			222,067,042			33,959,755


	Redeemable Series B Preferred Stock				Members’ Equity		Series A Preferred Stock (1)				Series B Preferred Stock (2)				Common Stock				Additional paid-in			Accumulated
	Shares		Amount		(Deficiency)		Shares		Amount		Shares		Amount		Shares		Amount		capital			deficit			Total
Balance - January 1, 2024		-	$	-	$	-		630,900	$	63		-	$	-		15,134,545	$	1,513	$	155,377,798		$	(150,080,049	)	$	5,299,325
Issuance of Warrants		-		-		-		-		-		-		-		-		-		1,512,290			(862,289	)		650,001
Exercise of share rights		-		-		-		-		-		-		-		10,252,269		1,026		(1,026	)		-			-
Net loss		-		-		-		-		-		-		-		-		-		-			(2,258,944	)		(2,258,944	)
Balance - March 31, 2024		-	$	-	$	-		630,900	$	63		-	$	-		25,386,814	$	2,539	$	156,889,062		$	(153,201,282	)	$	3,690,382

Series B Preferred Offering		422,200		5,524,500		-		-		-		-		-		-		-		2,653,105			-			2,653,105
Series B Preferred Offering costs		-		-																(290,390	)					(290,390	)
Series A Preferred shares issued in relation to guarantee agreement		-		-		-		215,000		22		-		-		-		-		3,009,978			-			3,010,000
Series A Preferred shares issued in relation to an acquisition of a business		-		-		-		552,000		55		-		-		-		-		8,567,945			-			8,568,000
Issuance of Series B preferred		105,592		1,375,467		-		-		-		-		-		-		-		(1,322,696	)		-			(1,322,696	)
Remeasurement of Series B Preferred Stock to redemption value																				(3,958,376	)					(3,958,376	)
Net loss		-		-		-		-		-		-		-		-		-					(2,353,969	)		(2,353,969	)
Balance - June 30, 2024		527,792	$	6,899,967	$	-		1,397,900	$	140		-	$	-		25,386,814	$	2,539	$	165,548,628		$	(155,555,251	)	$	9,996,056

	(1)	On January 10, 2024, the Company redomiciled and exchanged all outstanding shares of its pre-existing Series C Preferred Stock for shares of a new class of Series A Preferred Stock (Note 1 – Organization and Nature of Operations). The Statement of Changes in Stockholders’ Equity/Member’s Equity for the three and six months ended June 30, 2024 has been retrospectively restated to reflect this change.

	(2)	On January 10, 2024, the Company redomiciled and its pre-existing Series A class of Preferred Stock and Series B class of Preferred stock were eliminated (Note 1 – Organization and Nature of Operations). The Statement of Changes in Stockholders’ Equity/Member’s Equity for the three and six months ended June 30, 2024 has been retrospectively restated to reflect these changes.

	2024			2023
	For the Six Months Ended June 30,			For the Six Months Ended June 30,
	2024			2023

Net loss	$	(4,612,913	)		(23,568,649	)
Adjustments to reconcile net loss to net cash used in operating activities
Provision for credit losses		7,766			-
Gain on lease termination		(100,076	)		-
Goodwill impairment		-			15,669,287
Depreciation and amortization		684,151			368,556
Forgiveness of debt		-			(91,804	)
Stock based compensation		-			5,588,207
Change in fair value of derivative liability and derivative expense		(17,500	)		(9,652	)
Amortization of discounts and convertible options on debt		532,991			80,281
Changes in assets and liabilities
Accounts receivable		263,478			1,293
Subscription receivable		-			200,000
Prepaid expenses and other current assets		108,806			(47,583	)
Other receivables		1,711			(10,522	)
Inventory		(359,930	)		(39,042	)
Other assets		150,000			-
Right-of-use asset		196,877			111,711
Accounts payable, accrued expenses and deferred taxes		2,417,877			919,472
Customer deposits		385,898			1,000
Accrued payroll and payroll taxes		68,437			120,935
Finance lease liability		(2,304	)		-
Operating lease liability		(169,599	)		(58,980	)
Net cash used in operating activities		(444,330	)		(765,490	)

CASH FLOWS FROM INVESTING ACTIVITIES

Acquisition of business, net of cash acquired		(4,652,500	)		69,104
Acquisition of property and equipment		(918,345	)		(173,626	)
Net cash used in investing activities		(5,570,845	)		(104,522	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds received from issuance of warrants		650,001			-
Loan origination fees		(6,000	)		-
Proceeds from Series B Offering		4,222,000			-
Series B Offering Costs		(290,390	)
Proceeds from convertible notes payable		150,000			980,000
Repayments of convertible notes payable		-			(62,003	)
Proceeds from convertible note payables - related parties		50,000			300,000
Proceeds from notes payable		1,431,115			-
Repayments of notes payable		(905,570	)		(791,290	)
Proceeds from note payables - related parties		775,167			653,470
Repayment of notes payable - related parties		(107,939	)		-
Net cash provided by financing activities		5,968,384			1,080,177

NET (DECREASE) INCREASE IN CASH		(46,791	)		210,165

CASH - BEGINNING OF PERIOD		103,578			26,650

CASH - END OF PERIOD		56,787			236,815

CASH PAID DURING THE PERIOD FOR:
Interest expense		334,633			227,590

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Exercise of Share rights into common stock		1,026			-
Series A Preferred shares issued related to Guarantee agreement		3,010,000			-
Termination of lease		1,129,065			-
Remeasurement of Series B Preferred Shares to redemption value		1,375,467			-
Non-cash transactions related to reverse acquisition					27,162,222
Settlement of note payable		-			170,000

Property and Equipment, net Categories		Estimated Useful Life
Tractors and trailers		15 Years
Containers		25 Years
Equipment		10 Years
Leasehold improvements		5 Years

Finite Long-lived Intangible Assets Categories		Estimated Useful Life
Customer Lists		10 Years
Intellectual Property		10 Years
Noncompete agreement		5 Years
Tradenames		10 Years

			111
Balance as of December 31, 2023			-

Balance of March 31, 2024			-
Balance			-

Issuance of 422,200 Series B Preferred Stock due to Offering			1,568,895
Accretion of Series B issuances			3,955,916

Issuance of 5,000 Series B Preferred Stock			1,307,696
Accretion of Series B issuances			1,378

Issuance of 100,592 Series B Preferred Stock			65,000
Accretion of Series B issuances			1,082
Balance as of June 30, 2024			6,899,967
Balance			6,899,967

	As of June 30, 2024			As of December 31, 2023
Customer A		-*			-*
Customer B		11	%		24	%

* Represents amounts less than 10%

	June 30, 2024		June 30, 2023
Series A Preferred Stock		139,790,000		-
Series B Preferred stock (1)		-		147,013,500
Series C Preferred Stock (2)		-		7,010,000
Restricted Stock Awards		-		5,005,000
Convertible Notes		-		127,031,864
Warrants		55,922,119		108,734
Total common stock equivalents		195,712,119		286,169,098

	Estimated
Description	Fair Value

Assets:
Cash	$	2,545
Accounts receivable		1,387,932
Property and equipment		5,174,422
Prepaid expenses and other current assets		12,900
Other receivables		1,600
Right-of-use-asset		294,431
Goodwill		13,864,967
Assets acquired total	$	20,738,797

Liabilities:
Accounts payable and accrued expenses	$	(947,180	)
Accrued payroll and related taxes		(46,189	)
Operating lease liability, current		(83,654	)
Finance lease liability, current		(29,230	)
Notes payable		(3,271,231	)
Operating lease liability, noncurrent		(210,778	)
Finance lease liability, noncurrent		(70,137	)
Liabilities acquired total	$	(4,658,399	)

Net fair value of assets (liabilities) acquired	$	16,080,398

	Six Months Ended			Six Months Ended
	June 30,			June 30,
	2024			2023
Total revenue	$	8,434,611		$	7,783,109
Net loss	$	(5,099,149	)	$	(23,203,641	)
Pro forma loss per common share	$	(0.02	)	$	(0.68	)
Pro forma weighted average number of common shares basic and diluted		222,067,042			33,959,755


Titan Environmental Solutions Inc. market capitalization at closing	$	27,162,222
Total purchase consideration	$	27,162,222

	For the Years Ended,
	December 31,
Remainder of 2024	$	388,249
2025		770,356
2026		770,356
2027		770,356
2028		711,930
Thereafter		2,858,566
Total remaining amortization expense	$	6,269,813

	Trucking		Digester
Gross goodwill:
Balance as of January 1, 2023	$	-	$	-
Goodwill recognized		-		22,319,908
Balance as of June 30, 2023		-		22,319,908
Accumulated impairment		-		-
Balance as of January 1, 2023		-		-
Impairment		-		(15,669,287	)
Balance as of June 30, 2023		-		(15,669,287	)
Net carrying value, as of June 30, 2023		-		6,650,621

Gross goodwill:
Balance as of January 1, 2024		-		26,880,916
Goodwill beginning balance		-		26,880,916
Goodwill recognized		13,864,967		-
Balance as of June 30, 2024		13,864,967		26,880,916
Goodwill ending balance		13,864,967		26,880,916
Accumulated impairment:
Balance as of January 1, 2024		-		(20,364,001	)
Accumulated impairment beginning balance		-		(20,364,001	)
Impairment		-		-
Balance as of June 30, 2024		-		(20,364,001	)
Accumulated impairment ending balance		-		(20,364,001	)
Net carrying value, as of June 30, 2024	$	13,864,967	$	6,516,915

(g)	On May 30, 2024 the Company entered into a promissory note agreement with Dominic and Sharon Campo for $500,000. The note matures on July 15, 2024. The promissory note has an annual interest rate of 13.75% until maturity date and 18% after the maturity. As of June 30, 2024 the outstanding loan balance is $500,000 and has incurred $5,651 of accrued interest expense. The Company incurred debt issuance costs of $245,469 in connection with the execution of this agreement of which $122,734 has been amortized for the six months ending June 30, 2024 (please see Guarantee of Debt above). The debt issuance cost balance as of June 30, 2024 is $122,734. Upon default, a fifteen day “cure period” shall begin. Following the expiration of the cure period, any amounts outstanding shall be immediately due and payable. An additional charge of either $100,000 or 200,000 shares of Series A Preferred Stock shall become due. Subsequent to June 30, 2024, the maturity date of the note had passed and the cure period elapsed. Therefor the note was in default.

(h)	On May 31, 2024 the Company entered into a promissory note agreement with Dominic and Sharon Campo for $2,359,898. The note matures on May 15, 2027. The promissory note has an annual interest rate of 13.75% for the first year, 14.75% for the second year and 15.75% for the third year. Upon default, a 10 day “cure period” shall begin. As of June 30, 2024 the outstanding loan balance is $2,359,898 and has incurred $26,670 of accrued interest expense. The Company incurred debt issuance costs of $1,158,562 in connection with the execution of this agreement of which $32,182 has been amortized for the six months ending June 30, 2024 (please see Guarantee of Debt above). The debt issuance cost balance as of June 30, 2024 is $1,126,380.

(l)	On November 30, 2023, the Company and its COO, Jeff Rizzo (“Rizzo”), agreed to a promissory note for a principal amount of $65,000. The promissory note has an interest rate of 10% and a maturity date of June 30, 2024. The note also features a provision stating the Company will pay a 10% late fee in the event repayment is not made by more than 30 days past maturity. Subsequent to June 30, 2024, the maturity date elapsed and the promissory note was in default. Titan has an informal agreement with Rizzo to continually borrow from Rizzo as working capital needs arise. These additional funds are to be repaid as funding becomes available. As of June 30, 2024, Titan had borrowed $43,500 in additional funding.

(m)	Titan has an informal agreement with Charles B. Rizzo (“C. Rizzo”) to continually borrow from C. Rizzo as working capital needs arise. These additional funds are to be repaid as funding becomes available. As of June 30, 2024, Titan had borrowed $70,000 in additional funding.

(n)	On May 30, 2024, the Company and Frank Celli (“Celli”), agreed to a promissory note for a principal amount of $200,000. The promissory note has an annual interest rate of 10% and is to be repaid September 30, 2024. The note also features a provision stating the Company will pay a 10% late fee in the event repayment is not made by more than 30 days past maturity. On July 2, 2024 Celli and the Company agreed to cancel the promissory note in exchange for 20,183 units which include 20,183 warrants to purchase 100 shares of common stock each and 20,183 shares of Series B Preferred Stock. The warrants each exercisable have an exercise price of $0.06 per share (Note 18 – Subsequent Events).


Remainder of 2024	$	5,403,861
2025		2,135,946
2026		1,669,482
2027		3,551,162
2028		928,610
Thereafter		804,113
Total principal payments	$	14,493,174
Less: debt discounts		(2,889,394	)
Total notes payable	$	11,603,780

(a)	Between May 19, 2023 and August 7, 2023, the Company issued five 20% original issue discount Senior Secured Promissory Notes to Calvary (the “Calvary Fund Bridge Notes”). The Calvary Fund Bridge Notes have principal amounts ranging from $141,000 to $400,000. The Cavalry Fund Bridge Notes have an annual interest rate of 10% per annum and maturity dates ranging from May 19, 2024 to August 7, 2024. The Cavalry Fund Bridge Notes contain identical “rollover rights” conversion features that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. As of June 30, 2024, $604,000 of the Cavalry Fund Bridge Notes were in default. Subsequent to June 30, 2024, the maturity dates of the remaining Cavalry Fund Bridge Notes elapsed, and they were in default.

(b)	Between May 19, 2023 and July 7, 2023, the Company issued three 20% original issue discount Senior Secured Promissory Notes to Evergreen (the “Evergreen Bridge Notes”) with principal amounts ranging from $141,000 to $400,000. The Evergreen Bridge Notes have an annual interest rate of 10% per annum and were issued with maturity dates ranging from May 19, 2024 to July 7, 2024. The Evergreen Bridge Notes contain identical “rollover rights” conversion features that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. As of June 30, 2024, $604,000 of the Evergreen Bridge Notes were in default. Subsequent to June 30, 2024, the maturity dates of the remaining Evergreen Bridge Notes elapsed, and they were in default.

(c)	On July 20, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to Keystone Capital (the “Keystone - Bridge Note”) with a principal amount of $70,500. The Keystone Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 20, 2024. The Keystone Bridge Notes contains a “rollover rights” conversion features that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Keystone Bridge Note elapsed, and it was in default.

(d)	On July 20, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to Seven Knots (the “Seven Knots - Bridge Note”) with a principal amount of $70,500. The Seven Knots Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 20, 2024. The Seven Knots Bridge Notes contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Seven Knots Bridge Note elapsed, and it was in default.

(e)	On July 24, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to an individual investor (the “Individual #2 – Bridge Note”) with a principal amount of $300,000. The Individual #2 Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 20, 2024. The Individual #2 Bridge Notes contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Individual #2 Bridge Note elapsed, and it was in default.

(f)	On July 24, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to an individual investor (the “Individual #3 – Bridge Note”) with a principal amount of $30,000. The Individual #2 Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 24, 2024. The Individual #3 Bridge Notes contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Individual #3 Bridge Note elapsed and it was in default.

(g)	On July 24, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to an individual investor (the “Individual #4 – Bridge Note”) with a principal amount of $180,000. The Individual #4 Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 24, 2024. The Individual #4 Bridge Notes contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Individual #4 Bridge Note elapsed, and it was in default.

(h)	On July 28, 2023, the Company issued a 20% original issue discount Senior Secured Promissory Notes to an individual investor (the “Individual #5 – Bridge Note”) with a principal amount of $600,000. The Individual #5 Bridge Note has an annual interest rate of 10% per annum and was issued with a maturity date of July 28, 2024. The Individual #5 Bridge Notes contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. Subsequent to June 30, 2024, the maturity date of the Individual #5 Bridge Note elapsed, and it was in default.

(i)	On February 28, 2024, the Company issued a 25% original issue discount Senior Secured Promissory Notes to Chambers (the “Chambers Bridge Note”) with a principal amount of $62,500. The Chambers Bridge Note has an annual interest rate of 11% per annum and was issued with a maturity date of August 25, 2025. The Chambers Bridge Note contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering.

(j)	On February 28, 2024, the Company issued a 25% original issue discount Senior Secured Promissory Notes to the Leonard M. Schiller Revocable Trust (the “Schiller Bridge Note”) with a principal amount of $125,000. The Schiller Bridge Note has an annual interest rate of 11% per annum and was issued with a maturity date of August 25, 2025. The Schiller Bridge Note contains a “rollover rights” conversion feature that enable the holders to convert all or part of the note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering.

(k)	Between June 13, 2023 and July 24, 2023, the Company sold and issued two 20% original issue discount Senior Secured Promissory Notes (the “Miller Bridge Notes”) to Miller. The Miller Bridge Notes both have principal amounts of $240,000. The Miller Bridge Notes have an annual interest rate of 10% per annum and were issued with maturity dates ranging from June 13, 2024 to July 24, 2024. The Miller Bridge Note contains a “rollover rights” conversion feature that enables the holders to convert all or part of the Miller Bridge Note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public offering. As of June 30, 2024 one of the Miller Bridge Notes was in default. Subsequent to June 30, 2024, the maturity date of the remaining Miller Bridge Note elapsed, and it was in default.

(l)	On June 13, 2023, the Company sold and issued a 20% original issue discount Senior Secured Promissory Note (the “Titan 5 Bridge Note”) to Titan 5, a shareholder of the Company. The Titan 5 Bridge Note has a principal amount of $120,000, an annual interest rate of 10%, and was issued with a maturity date of June 13, 2024. The Titan 5 Bridge Note contains a “rollover rights” conversion feature that enables the holders to convert all or part of the Titan 5 Bridge Note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering. As of June 30, 2024, the Titan 5 Bridge Note was in default.

(m)	On December 28, 2023, the Company sold and issued a 20% original issue discount Senior Secured Promissory Note to Frank Celli, a Director of the Company. The Celli Bridge Note has a principal amount of $150,000, an annual interest rate of 10%, and was issued with a maturity date of December 28, 2024. On February 28, 2024, the Company sold and issued a 25% original discount Senior Secured Promissory Note to Frank Celli. The note has a principal amount of $62,500, an annual interest rate of 11%, and was issued with a maturity date of August 31, 2025. These notes are collectively referred to as the “Celli Bridge Notes”. The Celli Bridge Notes contain a “rollover rights” conversion feature that enables the holders to convert all or part of the Celli Bridge Note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering.

(n)	On December 22, 2023, the Company sold and issued a 20% original issue discount Senior Secured Promissory Note (the “FC Advisory Bridge Note”) to FC Advisory, a company owned by a Director of the Company. The FC Advisory Note has a principal amount of $60,000, an annual interest rate of 10%, and was issued with a maturity date of December 22, 2024. The FC Advisory Bridge Note contains a “rollover rights” conversion feature that enables the holders to convert all or part of the FC Advisory Bridge Note’s principal and accrued interest in the event of a public offering or private placement of the Company’s equity, equity linked, or debt securities into purchase consideration for said public or private offering.


Remainder of 2024	$	3,956,000
2025		250,000
Total principal payments		4,206,000
Less: debt discounts		(86,606	)
Total convertible notes payable	$	4,119,394

	Six Months Ended June 30, 2024			Year Ended December 31, 2023

Expected term (years)		N/A			0.12
Expected volatility		N/A	%		1,288.16	%
Expected dividend yield		N/A	%		0.00	%
Risk-free interest rate		N/A	%		4.79	%

Beginning balance as of December 31, 2023	$	17,500
Change in fair value of warrant - derivative liability		(17,500	)
Ending balance as of June 30, 2024	$	-

	●	Accrued dividends are paid at 105% of the accumulated amount when declared, during liquidation, or upon redemption of the preferred stock. If not paid quarterly on the last day of March, June, September, and December, the dividends will compound until they are paid or converted.
	●	The Company may elect to pay dividends in the form of common stock provided no Equity Conditions Failure has occurred, and such a payment would not cause the holder to exceed the Beneficial Ownership Limitation.

	○	Equity Conditions Failure occurs if certain conditions are not met during a specified period, including the continued listing of common stock on a trading market, timely delivery of shares issuable upon conversion, compliance with trading market rules, and absence of any Triggering Event.

	○	The number of shares issued as a stock dividend is calculated based on the average volume-weighted average price (VWAP) of the common stock.

	●	Conversion rate is based on the Stated Value plus unpaid dividends divided by the Conversion Price.
	●	Initial Conversion Price is $0.05, subject to adjustments.

	●	During a Triggering Event, holders can convert their shares at 125% of the Stated Value plus unpaid dividends.
	●	Conversion is subject to the Beneficial Ownership Limitation.

	●	If the Common Stock price equals or exceeds $1.00 for 20 consecutive Trading Days, with a daily trading volume over $1,000,000, and Equity Conditions are met, the Corporation can mandate conversion.
	●	Mandatory Conversion Notice must be delivered within five Trading Days after the Mandatory Conversion Measuring Period.