NOTES PAYABLE - CURRENT

12 Months Ended

Dec. 31, 2024

NOTE 5. - NOTES PAYABLE - CURRENT

Notes payable consist of:

	December 31,
	2024		2023
Demand note payable, 10%, secured by software (A)	$	12,500	$	12,500
Convertible promissory note, 8%, (B)		259,029		259,029
Convertible promissory note, 8%, (C)		213,772		213,772
Convertible promissory note, 8%, (D)		355,000		355,000
Convertible promissory note, 8%, (E)		566,000		566,000
Convertible promissory note, 8%, (F)		118,000		118,000
Financing arrangement on certain accounts receivable (G)		70,717		124,191
Financing and Security Agreement (H)		0		157,775
Financing and Security Agreement (I)		0		42,224
Sale of Future Receipts Agreement (J)		0		116,181
Convertible notes payable, 6% (K)		150,000		150,000
		1,745,018		2,114,672
Less: Deferred financing costs (F,G,H)		0		20,493
Debt discounts - warrants (F)		0		8,988
	$	1,745,018	$	2,085,191

(A) Demand Note payable, 10%, secured by Software- During 2015, the Company issued a note in connection with the purchase of Software.

(B) Convertible promissory note, 8%, due November 3, 2022– During 2021, the Company entered into a convertible promissory note. In exchange for the convertible promissory note, the lender agreed to lend the Company $448,000, which bears interest at a rate of eight percent (8%) per annum. The convertible promissory note was recorded net of a $44,800 original issue discount. Under the terms of the convertible promissory note, monthly payments of principal and interest of $53,760 were due beginning March 3, 2022, and each month thereafter with the final payment due on November 3, 2022. Additionally, in the event of a default as defined in the promissory note agreement, or if the Company elects to pre-pay the convertible promissory note, the lender and the agent has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $7.50 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to the lender in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The note is subject to customary events of default, including cross-defaults on the Loan agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the note are subject to a 12% default interest rate as well as a 15% penalty in the event of a default. The promissory note contains customary anti-dilution provisions. The Company evaluated the terms of the conversion feature under ASC 480 and ASC 815 and determined that separate bifurcation of the conversion feature was not required. In addition to the issuance of the convertible promissory note, the Company also granted the lender warrants (Note 9). In exchange for the promissory note, the Company accepted an original discount on the promissory note of $44,800 as noted above, paid a finder’s fee of $20,160, and the lender’s legal fees of $5,000. These deferred financing fees were amortized ratably through October 2022. The Company did not meet the monthly payment obligations; however, on November 23, 2022, the lender waived the default provisions as of November 23, 2022 and extended the maturity date to March 31, 2023 as part of an amendment which increased the balance of the note by $140,000 and the Company repaid the $140,000 five days later. As of the filing date, the Company has not paid off the note. The lender could trigger the default provisions.

(C) Convertible promissory note, 8%, due February 15, 2023– During 2022, the Company entered into a convertible promissory note. In exchange for the convertible promissory note, the lender agreed to lend the Company $370,000, which bears interest at a rate of eight percent (8%) per annum. The convertible promissory note was recorded net of a $37,000 original issue discount. Under the terms of the convertible promissory note, monthly payments of principal and interest of $44,400 were due beginning June 16, 2022, and each month thereafter with the final payment due on February 15, 2023. In February 2023, the due date was extended to May 30, 2023. Additionally, in the event of a default as defined in the promissory note agreement, or if the Company elects to pre-pay the convertible promissory note, the lender and the agent has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $7.50 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to the lender in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The note is subject to customary events of default, including cross-defaults on the note agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the Loan are subject to a 12% default interest rate as well as a 15% penalty in the event of a default. The promissory note contains customary anti-dilution provisions. The Company evaluated the terms of the conversion feature under ASC 480 and ASC 815 and determined that separate bifurcation of the conversion feature was not required. In addition to the issuance of the convertible promissory note, the Company also granted the lender warrants (Note 9). In exchange for the promissory note, the Company accepted an original discount on the promissory note of $37,000 as noted above, paid a finder’s fee of $14,650, and the lender’s legal fees of $3,000. These deferred financing fees are being amortized ratably through February 2023. The Company did not meet the monthly payment obligations; however, the lender waived the default provisions on February 5, 2023 through February 5, 2023. On February 5, 2023, the lender extended the maturity date to May 30, 2023 as part of an amendment and the Company owed $200,000 by March 31, 2023 or an additional $30,000 would be added to the balance. The Company paid $200,000 of the existing balance on April 3, 2023 and the lender waived the additional $30,000.

(D) Convertible promissory note, 8%, due May 26, 2023– During 2022, the Company entered into a convertible promissory note. In exchange for the convertible promissory note, the lender agreed to lend the Company $355,000, which bears interest at a rate of eight percent (8%) per annum. The convertible promissory note was recorded net of a $35,500 original issue discount. Under the terms of the convertible promissory note, monthly payments of principal and interest of $42,600 were due beginning September 27, 2022, and each month thereafter with the final payment due on May 26, 2023. Additionally, in the event of a default as defined in the promissory note agreement, or if the Company elects to pre-pay the convertible promissory note, the lender and the agent has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $7.50 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to the lender in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The note is subject to customary events of default, including cross-defaults on the note agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the note are subject to a 12% default interest rate as well as a 15% penalty in the event of a default. The promissory note contains customary anti-dilution provisions. The Company evaluated the terms of the conversion feature under ASC 480 and ASC 815 and determined that separate bifurcation of the conversion feature was not required. In addition to the issuance of the convertible promissory note, the Company also granted the lender warrants (Note 9). In exchange for the promissory note, the Company accepted an original discount on the Promissory note of $35,500 as noted above, paid a finder’s fee of $15,975, and the lender’s legal fees of $3,500. These deferred financing fees are being amortized ratably through May 2023. The Company did not meet the monthly payment obligations; however, the lender waived the default provisions through November 2022. However, the Company was in default as of December 31, 2022 and as of the filing date and the lender could trigger the default provisions.

(E) Convertible promissory note, 8%, due November 22, 2023– During 2022, the Company entered into a convertible promissory note. In exchange for the convertible promissory note, the lender agreed to lend the Company $566,000, which bears interest at a rate of eight percent (8%) per annum. The convertible promissory note was recorded net of a $56,600 original issue discount. Under the terms of the convertible promissory note, monthly payments of principal and interest of $67,920 were due beginning March 23, 2023, and each month thereafter with the final payment due on November 22, 2023. Additionally, in the event of a default as defined in the promissory note agreement, or if the Company elects to pre-pay the convertible promissory note, the lender and the agent has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $3.55 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to the lender in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The note is subject to customary events of default, including cross-defaults on the note agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the note are subject to a 12% default interest rate as well as a 15% penalty in the event of a default. The promissory note contains customary anti-dilution provisions. The Company evaluated the terms of the conversion feature under ASC 480 and ASC 815 and determined that separate bifurcation of the conversion feature was not required. In addition to the issuance of the convertible promissory note, the Company also granted the lender warrants (Note 9). In exchange for the promissory note, the Company accepted an original discount on the promissory note of $56,600 as noted above, paid a finder’s fee of $14,000, and the lender’s legal fees of $5,000. These deferred financing fees were being amortized ratably through November 2023. The Company did not meet the monthly obligation. As of the filing date, the lender could trigger the default provisions.

(F) Convertible promissory note, 8%, due February 3, 2024 –During 2023 the Company entered into a convertible promissory note. In exchange for the convertible promissory note, lender agreed to lend the Company $118,000, which bears interest at a rate of eight percent (8%) per annum. The convertible promissory note was recorded net of a $11,800 original issue discount. Under the terms of the Loan, amortization payments are due beginning June 3, 2023, and each month thereafter with the final payment due on February 3, 2024. Additionally, in the event of a default under the Loan or if the Company elects to pre-pay the note. The Lender has the right to convert any portion or all of the outstanding and unpaid principal and interest into fully paid and non-assessable shares of the Company’s common stock at a conversion price of $2.00 per share. The conversion price is subject to adjustment under certain circumstances, including issuances of Company common stock below the conversion price. The Company is not required to issue additional shares to the lender in the event an adjustment to the conversion price occurs. Except for the option to convert the note in the event of a pre-payment, there is no pre-payment penalty associated with the promissory note. The Loan is subject to customary events of default, including cross-defaults on the Loan agreements and on other indebtedness of the Company, violations of securities laws (including Regulation FD), and failure to issue shares upon a conversion of the note. Amounts due under the Loan are subject to a12% default interest rate as well as a 15% penalty in the event of a default. The promissory note contains customary anti-dilution provisions. The Company evaluated the terms of the conversion feature under ASC 480 and ASC 815 and determined that separate bifurcation of the conversion feature was not required. In addition to the issuance of the convertible promissory note, the Company also granted the lender warrants (Note 9). In exchange for the promissory note, the Company accepted an original discount on the Promissory note of $11,800 as noted above, paid a finder’s fee of $3,100, and the lender’s legal fees of $3,000. These deferred financing fees were being amortized ratably through January 2024. The Company did not meet the monthly obligation. As of the filing date, the lender could trigger the default provisions.

(G) Financing arrangement on certain accounts receivable- During 2022, the Company entered into a financing arrangement. Pursuant to the financing arrangement, the lender agreed to lend the Company $139,400 with a one--time fixed loan fee of $11,152 for a total obligation of $150,552. Under the terms of the financing arrangement, payments became due on August 15, 2022, and consisted of 25% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform and then due and owing to the Company or $16,728 over a sixty day period, whichever is higher. As of December 31, 2022, the outstanding balance was $75,838. Subsequent payments shall also consist of 25% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform and then due and owing to the Company or $16,728 over a sixty day period, whichever is higher, with the final payment due on February 6, 2024. During March 2023, the Company entered into a revised financing arrangement with the lender. Under the terms of the revised financing arrangement, the lender loaned the Company $155,800 with a one-time fixed loan fee of $12,464 for a total obligation of $168,264. The balance of the original loan of $27,559 was paid to the lender as part of the revised financing agreement. The lender payments became due on March 24, 2023, and consisted of 30% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform and then due and owing to the Company or $18,696 over a sixty-day period, whichever is higher, with the final payment due on September 14, 2024. During October 2023, the Company entered into a second revised financing arrangement with the lender. Under the terms of the second revised financing arrangement, the lender loaned the Company $140,200 with a one-time fixed loan fee of $16,403 for a total obligation of $156,603. The balance of the original revised loan of $35,754 was paid to the lender as part of the revised financing agreement. The lender payments became due on October 19, 2023, and consisted of 20% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform and then due and owing to the Company or $17,400 over a sixty-day period, whichever is higher, with the final payment due on April 11, 2025. During June 2024, the Company entered into a revised financing arrangement with Celtic Bank which originally loaned the Company $150,500 with a one-time fixed loan fee of $17,157 for a total obligation of $167,657. In 2023, under the terms of the previous revised financing arrangement, the lender loaned the Company $140,200 with a one-time fixed loan fee of $16,403 for a total obligation of $156,603. The balance of the previous loan of $33,815 was paid to the lender as part of the revised financing agreement. Payments to the lender began on June 11, 2024, and consisted of 20% of the Company’s receivables processed through Stripe, Inc.’s payment processing platform or $18,629 over a sixty-day period, whichever is higher, with the final payment due on December 3, 2025, The loan is subject to customary events of default. No material relationship exists between the Company or its affiliates and lender, other than in respect to the processing of credit card payments through Stripe, Inc.’s payment processing platform, and the lender’s loan agreement.

(H) Financing and Security Agreement, due September 16, 2024 -On September 14, 2023, the Company, as borrower, entered into a Financing and Security Agreement ("Agreement") with Celtic Bank Corporation (the “Celtic”). In exchange for a line of credit (“LOC”), Celtic agreed to lend the Company $200,000, with a payment plan of $20,892 per month for 12 months effective October 16, 2023. The annual percentage rate of the LOC is 48.4%. If LOC is prepaid, the unpaid interest accrued will be due to Celtic. If an additional draw on the LOC is requested, a draw fee will be imposed. The LOC agreement has ended as of December 31, 2024.

(I) Financing and Security Agreement, due December 16, 2024 -On September 14, 2023, the Company, as borrower, requested and received a draw against the LOC noted in (H) above. The amount of the draw was $42,224 with a payment plan of $4,411 per month for 12 months effective January 16, 2024. A draw fee of $967 was imposed. In October 2024, Celtic forgave the remaining payments on the subordinated business loan for $93,381. This forgiveness of debt resulted in a gain of approximately $45,200.

(J) Sale of Future Receipts Agreement, due November 15, 2024 -On December 15, 2023, the Company, as borrower, entered into a Sale of Future Receipts Agreement ("Agreement") with Fresh Funding Solutions, Inc. (“Fresh”). The Company is selling a portion of a future revenue stream to Fresh at a discount. The purchase price paid to the Company was $120,000. The net amount funded to the Company was $118,765 net of fees with a payment plan of $3,250 per week for 48 weeks. The effective interest rate of the agreement is 58.6% In October 2024, Fresh Funding forgave the remaining payments on the subordinated business loan for $64,750. This forgiveness of debt resulted in a loss of approximately $1,500.

(K) Convertible notes payable, 6%, maturity date of December 31, 2016-At December 31, 2024, the Company was obligated to unrelated third parties for $150,000 ($150,000 - 2023) (“The Notes”). The principal is unsecured and convertible at the option of the holders into shares of common stock at $3.75 per share. The Notes bear interest at 6.0% and is past due. The Notes are convertible into shares of common stock subject to the following limitations. The Notes are not convertible to the extent that shares of common stock issuable upon the proposed conversion would result in a change in control of the Company which would limit the use of its net operating loss carryforwards; provided, however if the Company closes a transaction with another third party or parties that results in a change of control which will limit the use of its net operating loss carryforwards, then the foregoing limitation shall lapse. Prior to any conversion by a requesting note holder, each note holder holding a note which is then convertible into 5% or more of the Company’s common stock shall be entitled to participate on a pari passu basis with the requesting note holder and upon any such participation the requesting note holder shall proportionately adjust his conversion request such that, in the aggregate, a change of control, which will limit the use of the Company’s net operating loss carryforwards, does not occur.

Notes payable - related parties consist of:

	December 31,
	2024		2023
Demand notes payable to director, 6%, unsecured	$	40,000	$	120,000
Demand note payable to employee, 6% unsecured		50,000		50,000
Demand notes payable to officer and director, 6%, unsecured		37,000		37,000
Demand note payable to officer and director, 6%, unsecured		12,000		12,000
	$	139,000	$	219,000

INFINITE GROUP INC 10-K