| Convertible Debt and Other Debt |
5) Convertible Debt and Other Debt
Convertible
Debt
On
various dates during the three months ended March 31, 2022, the Company issued convertible notes for a total of $1,114,738
which contained varied terms and conditions
as follows: a) 5-12
month maturity date; b) interest rates of
12%;
c) convertible to the Company’s common stock
at issuance at a fixed rate of $2.50
or at variable conversion rates upon the Company’s
up-listing to NASDAQ or NYSE or an event of default. These notes were issued with either shares of common stock or warrants to purchase
common stock that were fair valued at issuance date. The aggregate relative fair value of the shares of common stock and warrants issued
with the notes of $229,916
was recorded as a debt discount to be amortized
over the term of the notes. We also evaluated the convertible notes for derivative liability treatment and determined that the notes
did not qualify for derivative accounting treatment at March 31, 2022.
The specific terms of the convertible notes and outstanding balances as of March 31, 2022 are listed in the tables
below.
Schedule of Convertible Debts and Outstanding Balances
| Inception Date |
|
Term |
|
Loan Amount |
|
|
Outstanding balance with OID |
|
|
Original Issue Discount (OID) |
|
|
Interest Rate |
|
|
Conversion Price |
|
|
Deferred Finance Fees |
|
|
Discount for conversion
feature and warrants/shares
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 17, 2018 (1)(2) |
|
12 months |
|
$ |
380,000 |
|
|
$ |
98,544 |
|
|
$ |
15,200 |
|
|
|
8 |
% |
|
$ |
2.50 |
|
|
$ |
15,200 |
|
|
$ |
332,407 |
|
|
January
3, 2019 (1)(4) |
|
6 months |
|
$ |
50,000 |
|
|
$ |
50,000 |
|
|
$ |
2,500 |
|
|
|
24 |
% |
|
$ |
7.50 |
|
|
$ |
2,500 |
|
|
$ |
- |
|
|
June 4, 2019 (1)(2) |
|
9 months |
|
$ |
500,000 |
|
|
$ |
302,484 |
|
|
$ |
- |
|
|
|
8 |
% |
|
$ |
2.50 |
|
|
$ |
40,500 |
|
|
$ |
70,631 |
|
|
July 19, 2019 (1) (2) |
|
12 months |
|
$ |
115,000 |
|
|
$ |
115,000 |
|
|
$ |
- |
|
|
|
4 |
% |
|
$ |
2.50 |
|
|
$ |
5,750 |
|
|
$ |
15,460 |
|
|
September 27,2019 (1) (2) |
|
12 months |
|
$ |
78,750 |
|
|
$ |
78,750 |
|
|
$ |
- |
|
|
|
4 |
% |
|
$ |
2.50 |
|
|
$ |
3,750 |
|
|
$ |
13,759 |
|
|
October 24, 2019 (1) (2) |
|
12 months |
|
$ |
78,750 |
|
|
$ |
78,750 |
|
|
$ |
- |
|
|
|
4 |
% |
|
$ |
2.50 |
|
|
$ |
3,750 |
|
|
$ |
- |
|
|
November 15,2019 (1) |
|
12 months |
|
$ |
385,000 |
|
|
$ |
320,000 |
|
|
$ |
35,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
35,000 |
|
|
$ |
90,917 |
|
|
January 2,2020 (1) |
|
12 months |
|
$ |
330,000 |
|
|
$ |
330,000 |
|
|
$ |
30,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
30,000 |
|
|
$ |
91,606 |
|
|
January 24,2020 (1) |
|
12 months |
|
$ |
247,500 |
|
|
$ |
247,500 |
|
|
$ |
22,500 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
22,500 |
|
|
$ |
89,707 |
|
|
January 29, 2020 (1) |
|
12 months |
|
$ |
363,000 |
|
|
$ |
363,000 |
|
|
$ |
33,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
33,000 |
|
|
$ |
297,000 |
|
|
February 12, 2020 (1) |
|
12 months |
|
$ |
275,000 |
|
|
$ |
275,000 |
|
|
$ |
25,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
25,000 |
|
|
$ |
225,000 |
|
|
February 19,2020 (1) |
|
12 months |
|
$ |
165,000 |
|
|
$ |
165,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
15,000 |
|
|
$ |
135,000 |
|
|
March 11,2020 (1) |
|
12 months |
|
$ |
330,000 |
|
|
$ |
330,000 |
|
|
$ |
30,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
30,000 |
|
|
$ |
232,810 |
|
|
March 13, 2020 (1) |
|
12 months |
|
$ |
165,000 |
|
|
$ |
165,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
15,000 |
|
|
$ |
60,705 |
|
|
March 26, 2020 (1) |
|
12 months |
|
$ |
111,100 |
|
|
$ |
111,100 |
|
|
$ |
10,100 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
10,100 |
|
|
$ |
90,900 |
|
|
April 8, 2020 (1) |
|
12 months |
|
$ |
276,100 |
|
|
$ |
276,100 |
|
|
$ |
25,100 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
25,000 |
|
|
$ |
221,654 |
|
|
April 17,2020 (1) |
|
12 months |
|
$ |
143,750 |
|
|
$ |
143,750 |
|
|
$ |
18,750 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
96,208 |
|
|
April 30,2020 (1) |
|
12 months |
|
$ |
546,250 |
|
|
$ |
546,250 |
|
|
$ |
71,250 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
47,500 |
|
|
$ |
427,500 |
|
|
May 6, 2020 (1) |
|
12 months |
|
$ |
460,000 |
|
|
$ |
460,000 |
|
|
$ |
60,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
40,000 |
|
|
$ |
360,000 |
|
|
May 18,2020 (1) |
|
12 months |
|
$ |
546,250 |
|
|
$ |
221,250 |
|
|
$ |
46,250 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
35,500 |
|
|
$ |
439,500 |
|
|
June 2, 2020 (1) |
|
12 months |
|
$ |
902,750 |
|
|
$ |
652,750 |
|
|
$ |
92,750 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
58,900 |
|
|
$ |
708,500 |
|
|
June 12,2020 (1) |
|
12 months |
|
$ |
57,500 |
|
|
$ |
57,500 |
|
|
$ |
7,500 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
5,000 |
|
|
$ |
45,000 |
|
|
June 22, 2020 (1) |
|
12 months |
|
$ |
138,000 |
|
|
$ |
138,000 |
|
|
$ |
18,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
12,000 |
|
|
$ |
108,000 |
|
|
July 7, 2020 (1) |
|
12 months |
|
$ |
586,500 |
|
|
$ |
586,500 |
|
|
$ |
76,500 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
51,000 |
|
|
$ |
400,234 |
|
|
July 17, 2020 (1) |
|
12 months |
|
$ |
362,250 |
|
|
$ |
362,250 |
|
|
$ |
47,250 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
31,500 |
|
|
$ |
185,698 |
|
|
July 29, 2020 (1) |
|
12 months |
|
$ |
345,000 |
|
|
$ |
345,000 |
|
|
$ |
45,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
30,000 |
|
|
$ |
241,245 |
|
|
July 21, 2020 (1) (5) |
|
12 months |
|
$ |
115,000 |
|
|
$ |
115,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
10,000 |
|
|
$ |
24,875 |
|
|
August 14, 2020 (1) |
|
12 months |
|
$ |
762,450 |
|
|
$ |
462,450 |
|
|
$ |
69,450 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
66,300 |
|
|
$ |
580,124 |
|
|
September 10, 2020 (1) |
|
12 months |
|
$ |
391,000 |
|
|
$ |
391,000 |
|
|
$ |
51,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
34,000 |
|
|
$ |
231,043 |
|
|
September 21, 2020 (1) (5) |
|
12 months |
|
$ |
345,000 |
|
|
$ |
345,000 |
|
|
$ |
45,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
30,000 |
|
|
$ |
66,375 |
|
|
September 23, 2020 (1) |
|
12 months |
|
$ |
115,000 |
|
|
$ |
15,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
10,000 |
|
|
$ |
20,500 |
|
|
December 3, 2020 (1) |
|
12 months |
|
$ |
299,000 |
|
|
$ |
299,000 |
|
|
$ |
39,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
26,000 |
|
|
$ |
197,882 |
|
|
October 22, 2020 (1) (5) |
|
12 months |
|
$ |
115,000 |
|
|
$ |
115,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
10,000 |
|
|
$ |
18,875 |
|
|
February 17, 2021 (1) |
|
12 months |
|
$ |
230,000 |
|
|
$ |
230,000 |
|
|
$ |
30,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
20,000 |
|
|
$ |
180,000 |
|
|
March 23, 2021 (1) |
|
12 months |
|
$ |
55,000 |
|
|
$ |
55,000 |
|
|
$ |
5,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
36,431 |
|
|
May
6, 2021 (1) |
|
12 months |
|
$ |
402,500 |
|
|
$ |
402,500 |
|
|
$ |
52,500 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
35,000 |
|
|
$ |
312,551 |
|
| June 17, 2021 |
|
12 months |
|
$ |
230,000 |
|
|
$ |
230,000 |
|
|
$ |
30,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
20,000 |
|
|
$ |
144,760 |
|
| June 25, 2021 |
|
12 months |
|
$ |
977,500 |
|
|
$ |
977,500 |
|
|
$ |
127,500 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
773,802 |
|
|
June
3, 2021 (1) |
|
6 months |
|
$ |
50,000 |
|
|
$ |
50,000 |
|
|
$ |
1,500 |
|
|
|
12 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
7,948 |
|
|
March
1, 2022 (13) |
|
6 months |
|
$ |
700,000 |
|
|
$ |
700,000 |
|
|
$ |
84,000 |
|
|
|
12 |
% |
|
|
(6 |
) |
|
$ |
- |
|
|
$ |
- |
|
| July 3, 2021 |
|
12 months |
|
$ |
115,000 |
|
|
$ |
115,000 |
|
|
$ |
15,000 |
|
|
|
10 |
% |
|
$ |
2.50 |
|
|
$ |
10,000 |
|
|
$ |
90,000 |
|
|
February
1, 2022 (14) |
|
6 months |
|
$ |
260,000 |
|
|
$ |
210,000 |
|
|
$ |
10,000 |
|
|
|
12 |
% |
|
$ |
(7 |
) |
|
$ |
2,000 |
|
|
$ |
- |
|
|
February
4, 2022 (13) |
|
8 months |
|
$ |
500,000 |
|
|
$ |
500,000 |
|
|
$ |
30,000 |
|
|
|
12 |
% |
|
$ |
(11 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
July
6, 2021 (1) |
|
6 months |
|
$ |
130,000 |
|
|
$ |
130,000 |
|
|
$ |
10,000 |
|
|
|
12 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
- |
|
|
July
15, 2021 (1) |
|
6 months |
|
$ |
100,000 |
|
|
$ |
45,000 |
|
|
$ |
5,000 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
57,716 |
|
|
January
19, 2022 (14) |
|
6 months |
|
$ |
52,000 |
|
|
$ |
52,000 |
|
|
$ |
2,000 |
|
|
|
12 |
% |
|
$ |
2.50 |
|
|
$ |
2,000 |
|
|
$ |
- |
|
|
January
20, 2022 (3) (14) |
|
6 months |
|
$ |
352,188 |
|
|
$ |
352,188 |
|
|
$ |
45,938 |
|
|
|
(3 |
) |
|
|
(8 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
January
20, 2022 (3) (14) |
|
6 months |
|
$ |
352,188 |
|
|
$ |
352,188 |
|
|
$ |
45,938 |
|
|
|
(3 |
) |
|
|
(8 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
January
20, 2022 (3) (14) |
|
6 months |
|
$ |
140,875 |
|
|
$ |
140,875 |
|
|
$ |
18,375 |
|
|
|
(3 |
) |
|
|
(8 |
) |
|
$ |
- |
|
|
$ |
- |
|
|
August 31, 2021 |
|
12 months |
|
$ |
189,750 |
|
|
$ |
189,750 |
|
|
$ |
24,750 |
|
|
|
10 |
% |
|
|
(9 |
) |
|
$ |
16,500 |
|
|
$ |
148,500 |
|
|
Sept.
8, 2021 (1) |
|
8 months |
|
$ |
78,000 |
|
|
$ |
78,000 |
|
|
$ |
3,000 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
40,449 |
|
|
Sept.
10, 2021 (1) |
|
8 months |
|
$ |
100,000 |
|
|
$ |
100,000 |
|
|
$ |
4,000 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
43,520 |
|
|
Sept. 15, 2021 (1) |
|
6 months |
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
$ |
12,500 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
108,801 |
|
|
Sept.
16, 2021 (1) |
|
6 months |
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
$ |
12,500 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
112,337 |
|
| Sept. 24, 2021 |
|
8 months |
|
$ |
125,000 |
|
|
$ |
125,000 |
|
|
$ |
6,250 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
- |
|
|
$ |
61,876 |
|
|
Sept.
15, 2021 (1) |
|
6 months |
|
$ |
250,000 |
|
|
$ |
250,000 |
|
|
$ |
37,500 |
|
|
|
12 |
% |
|
|
(7 |
) |
|
$ |
30,000 |
|
|
$ |
- |
|
|
October
21, 2021 (5) |
|
12 months |
|
$ |
189,750 |
|
|
$ |
189,750 |
|
|
$ |
24,750 |
|
|
|
12 |
% |
|
$ |
2.50 |
|
|
$ |
16,500 |
|
|
$ |
87,332 |
|
|
November
1, 2021 (5) |
|
12 months |
|
$ |
189,750 |
|
|
$ |
189,750 |
|
|
$ |
24,750 |
|
|
|
12 |
% |
|
$ |
2.50 |
|
|
$ |
- |
|
|
$ |
96,991 |
|
| December 7, 2021 |
|
12 months |
|
$ |
169,500 |
|
|
$ |
118,650 |
|
|
$ |
19,500 |
|
|
|
12 |
% |
|
|
(10 |
) |
|
$ |
3,750 |
|
|
$ |
- |
|
| March 23,2022 |
|
8 months |
|
$ |
56,500 |
|
|
$ |
56,500 |
|
|
$ |
6,500 |
|
|
|
12 |
% |
|
|
(12 |
) |
|
$ |
- |
|
|
$ |
- |
|
| March
29, 2022 |
|
8 months |
|
$ |
112,000 |
|
|
$ |
112,000 |
|
|
$ |
13,000 |
|
|
|
12 |
% |
|
|
(12 |
) |
|
$ |
- |
|
|
$ |
- |
|
| February 9,2022 |
|
12 months |
|
$ |
88,987 |
|
|
$ |
80,112 |
|
|
$ |
10,237 |
|
|
|
12 |
% |
|
|
(10 |
) |
|
$ |
- |
|
|
$ |
- |
|
| March
30, 2022 |
|
12 months |
|
$ |
10,000 |
|
|
$ |
10,000 |
|
|
$ |
- |
|
|
|
12 |
% |
|
|
2.50 |
|
|
$ |
- |
|
|
$ |
38,400 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
$ |
15,103,691 |
|
|
$ |
1,703,088 |
|
|
|
|
|
|
|
|
|
|
$ |
965,500 |
|
|
$ |
8,460,529 |
|
| |
(1) |
The
Note is past due. The Company and the lender are negotiating in good faith to extend the loan. |
| |
(2) |
The
Company and lenders have entered into Standstill and Forbearance Agreements (as described below). |
| |
(3) |
Note
is secured by the assets of the Company’s subsidiary, PBI Agrochem, Inc. and interest rate is 40.9%
OID. |
| |
(4) |
During
the year ended December 31, 2020, the Company entered into a Rate Modification Agreement with this lender. In this agreement
the lender agreed to reduce their interest rate and were granted the right to convert loans using a variable conversion price if
more than one other variable rate lender converted at a variable rate. |
| |
(5) |
The
Company has agreed to issue shares of its common stock to lenders if their notes are not repaid by a defined date. |
| |
(6) |
Loan
is not convertible until 180 days from the date of issuance of the Note and following an Event of Default will be convertible at
the lowest trading price of the 20 days prior to conversion. The loan is guaranteed by the Company’s Chief Executive
Officer, but the lender may only enforce this guarantee after certain conditions have been met, specifically after (i) the occurrence
of an Event of Default (as defined in the Note), (ii) the failure of the Company to cure the Default in 10 business days, and (iii)
a failure by the Company to issue, or cause to be issued, shares of its common stock upon submission by the lender of a notice of
conversion. |
| |
(7) |
Notes
are convertible before maturity at $2.50 per share or mandatorily convertible when the Company up-lists to the NASDAQ at the lower
of $2.50 or the up-list price. |
| |
(8) |
Notes
can be converted at the lesser of $2.50 per share or 25% discount to the opening price of the Company’s first day of trading
on either Nasdaq or NYSE. In addition, if the Company fails to pay the Note in cash on maturity date, the conversion price will be
adjusted to the lesser of original conversion price or the product of the VWAP of the common stock for the 5 trading dates immediately
prior to the maturity date multiplied by 0.75. |
| |
(9) |
Conversion
price of this note is $2.50 and will be adjusted to, upon an Event of Default, the lower of (i) the conversion price or (ii) a 25%
discount to the 5-day average VWAP of the stock prior to default. Additionally, if an up-list to a national exchange occurs while
this note is outstanding, the conversion price shall be changed to the lower of (i) the conversion price or (ii) a 25% discount to
the up-list price. |
| |
(10) |
Notes are convertible upon an Event of Default at 75%
multiplied by the lowest trading price for the common stock during the five days prior to the conversion. |
| |
(11) |
Loans
can be voluntarily converted before maturity at $2.50
per share. Lender retains the option
upon an Up-list to convert at the lower of $2.50
or the 10% off Up-list price.
|
| |
(12) |
Notes are convertible at $2.50 per share except that
following an Event of Default the conversion price will be adjusted to 75% multiplied by the lowest trading price for the common
stock during the five days prior to the conversion. |
| |
(13) |
During the three months ended March 31, 2022, the Company extended two
loans totaling $475,000 and increased the principal to $1,200,000. The Company issued 60,000 shares of common stock for these extensions
and added principal. |
| |
(14) |
During the three months ended
March 31, 2022, the Company extended five loans totaling $1,045,000 and increased the principal to 1,107,251
and issued 149,500
shares of common stock for the extensions. |
As
of March 31, 2022, one lender holds approximately $9.4
million of the $15.1
million convertible notes outstanding.
For
the three months ended March 31, 2022, the Company recognized amortization expense related to the debt discounts indicated above of $794,242.
The unamortized debt discounts as of March 31, 2022
related to the convertible debentures and other convertible notes amounted to $813,478.
Standstill
and Forbearance Agreements
In recent years,
the Company entered into Standstill and Forbearance Agreements with lenders who hold variable-rate convertible notes. Pursuant to these
agreements the lenders agreed to not convert any portion of their notes into shares of common stock at a variable rate. The Company and two lenders ($673,528 outstanding principal at March 31, 2022) are negotiating in good faith to resolve
the remaining loans.
In
connection to these agreements, the Company incurred interest, penalties, and fees of approximately $202,050
in the three months ended March 31, 2022.
Convertible
Loan Modifications and Extinguishments
We
refinanced certain convertible loans during the three months ended March 31, 2022 at substantially the same terms for extensions ranging
over a period of three to six months. We amortized any remaining unamortized debt discount as of the modification date over the remaining,
extended term of the new loans. We applied ASC 470 of modification accounting to the debt instruments which were modified during the
quarter or those settled with new notes issued concurrently for the same amounts but different maturity dates. The terms such as the
interest rate, prepayment penalties, and default rates will be the same over the new extensions. According to ASC 470, an exchange of
debt instruments between or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation is deemed
to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms
of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the
original instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less
than 10 percent, the debt instruments are not considered to be substantially different and will be accounted for as modifications.
The
cash flows of new debt exceeded 10% of the remaining cash flows of the original debt on several loans. During the three months ended
March 31, 2022 we recorded losses on extinguishment of liabilities of approximately $0.6 million by calculating the difference of the
fair value of the new debt and the carrying value of the old debt.
The
following table provides a summary of the changes in convertible debt, net of unamortized discounts, during 2022:
Summary
of Changes in Convertible Debt and Revolving Note Payable, Net of Unamortized Discounts
| |
|
2022 |
|
| Balance at January 1, |
|
$ |
12,839,813 |
|
| Early adoption of ASU 2020-06 |
|
|
473,027 |
|
| Issuance of convertible debt, face value |
|
|
1,114,738 |
|
| Deferred financing cost |
|
|
(308,738 |
) |
| Debt discount from shares and warrants issued with debt |
|
|
(229,916 |
) |
| Payments |
|
|
(324,350 |
) |
| Conversion of debt into equity |
|
|
(68,159 |
) |
| Accretion of interest and amortization of debt discount to interest expense |
|
|
794,242 |
|
| Balance at March 31, |
|
|
14,290,657 |
|
| Less: current portion |
|
|
14,290,657 |
|
| Convertible debt, long-term portion |
|
$ |
– |
|
Other
Notes
As of March 31, 2022
the Company owes $691,500 on two notes to a private
investor. During the three months ended March 31, 2022, the Company issued 100,000 warrants (3 year term, $3.50 strike price) to the
lender. The Company and the lender are negotiating in good faith to extend these
loans.
On
October 1, 2019, the Company and the holder of the $170,000 non-convertible loan issued in May 2017 agreed to extend the term of the
loan to December 31, 2019. The Company agreed to issue 1,200 shares of its common stock per month while the note remains outstanding.
The note will continue to earn 10% annual interest. The loan is currently past due and the Company and the investor are negotiating in
good faith to extend the loan.
Merchant
Agreements
We
have signed various Merchant Agreements which are secured by second position rights to all customer receipts until the loan has been
repaid in full and subject to interest rates of 10.8%
per month. As illustrated in the following table,
under the terms of these agreements, we received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which
is collected by the Merchant lenders at the disclosed Daily Payment Rate. The Company’s Chief Executive Officer (“Guarantor”) is
guaranteeing that the Company will perform its obligations under the Agreement. In no circumstance will Guarantor be asked
or obligated to repay or be liable for the payment of any amount paid by Buyer to Seller, including, but not limited to, the Purchase Price.
The
following table shows our Merchant Agreements as of March 31, 2022:
Schedule
of Merchant Agreements
| Inception Date |
|
Purchase Price |
|
|
Purchased Amount |
|
|
Outstanding
Balance |
|
|
Payment
frequency |
|
Payment
Rate |
|
|
Deferred Finance Fees |
|
| February 10, 2022 |
|
$ |
120,000 |
|
|
$ |
157,560 |
|
|
$ |
67,285 |
|
|
Weekly |
|
|
7,878.00 |
|
|
$ |
1,200 |
|
| January 11, 2022 |
|
$ |
240,000 |
|
|
$ |
300,000 |
|
|
$ |
125,140 |
|
|
Weekly |
|
|
11,112.00 |
|
|
$ |
- |
|
| December 21, 2021 |
|
$ |
400,000 |
|
|
$ |
520,000 |
|
|
$ |
268,775 |
|
|
Weekly |
|
|
11,305.00 |
|
|
$ |
6,000 |
|
| |
|
$ |
760,000 |
|
|
$ |
977,560 |
|
|
$ |
461,200 |
|
|
|
|
|
|
|
|
$ |
7,200 |
|
The
following table shows our Merchant Agreements as of December 31, 2021:
| Inception Date |
|
Purchase Price
|
|
|
Purchased Amount |
|
|
Outstanding Balance |
|
|
Payment frequency
|
|
Payment Rate
|
|
|
Deferred
Finance Fees
|
|
| December
21, 2021 |
|
$ |
400,000 |
|
|
$ |
520,000 |
|
|
$ |
390,120 |
|
|
Weekly |
|
|
11,305.00 |
|
|
$ |
6,000 |
|
| July
6, 2021 |
|
|
125,000 |
|
|
|
166,250 |
|
|
|
8,790 |
|
|
Daily |
|
|
1,279.00 |
|
|
|
2,500 |
|
| |
|
$ |
525,000 |
|
|
$ |
686,250 |
|
|
$ |
398,910 |
|
|
|
|
|
|
|
|
$ |
8,500 |
|
We
have accounted for the Merchant Agreements as loans under ASC 860 because while we provided rights to current and future receipts, we
still had control over the receipts. The difference between the Purchase Amount and the Purchase Price is imputed interest that is recorded
as interest expense when paid each day.
Related
Party Notes
During the three months ended
March 31, 2022, we received short-term non-convertible loans of $195,250
from related parties, which bear interest rates
of 12%
and are due upon demand.
Long
term debt
The Company entered into
a COVID-19 government loan in 2020, the Economic Injury Disaster Loan (or “EIDL”). The Company’s EIDL loan, $150,000,
accrues interest at 3.75%
and requires monthly payments of $731
for principal and interest beginning in December 2022. The balance of the principal will be due in 30
years. In connection with the EIDL loan the Company entered into a security agreement with the SBA, whereby the Company
granted the SBA a security interest in all of the Company’s right, title and interest in all of the Company’s assets.
|