(9) Debt

Convertible Debt

On various dates during the year ended December 31, 2022, the Company issued convertible notes for net proceeds of approximately $4.9 million which contained varied terms and conditions as follows: a) 1-12 month maturity date; b) interest rates of 0-18% per annum 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 shares of common stock or warrants to purchase common stock that were fairly valued at issuance dates. The aggregate relative fair value of the shares of common stock issued with the notes of $873,854 was recorded as a debt discount to be amortized over the term of the notes. The aggregate relative fair value of the warrants issued with the notes of $93,576 was also recorded as a debt discount to be amortized over the term of the notes. Deferred financing costs and OID issued with the debt are $541,313 and the Company repaid $1,522,494 for the year ended December 31, 2022. Finally, we evaluated our convertible notes for derivative liability treatment on an on-going basis and have determined that all our notes did not qualify for derivative accounting treatment at December 31, 2022. In the year ended December 31, 2022 the amortization of debt discount on convertible notes was $1,694,028.

On various dates during the year ended December 31, 2021, the Company issued convertible notes for net proceeds of approximately $5.5 million which contained varied terms and conditions as follows: a) 6-12 month maturity date; b) interest rates of 10-18% per annum and c) convertible to the Company’s common stock at issuance at fixed rates of $2.50 and $3.00 or at a variable conversion rates upon the Company’s up-listing to NASDAQ or NYSE or an event of default. These notes were issued with shares of common stock or warrants to purchase common stock that were fair valued at issuance dates. The aggregate relative fair value of the shares of common stock issued with the notes of $646,718 was recorded as a debt discount to be amortized over the term of the notes. The aggregate relative fair value of $1.4 million for the warrants issued with the notes was recorded as a debt discount to be amortized over the term of the notes. We then computed the effective conversion price of the notes and recorded a BCF of $1.3 million as a debt discount to be amortized over the term of the notes. Finally, we evaluated our convertible notes for derivative liability treatment on an on-going basis and have determined that all our notes did not qualify for derivative accounting treatment at December 31, 2021. In the year ended December 31, 2021 the amortization of debt discount on convertible notes was approximately $6.7 million.

The summary of specific terms of the convertible notes and outstanding balances as of December 31, 2022 and December 31, 2021 are listed in the tables below. The convertible notes are from numerous parties and with original issue dates from June, 2019 to December, 2022, and maturity dates from March, 2020 to December, 2023. There are approximately $12 million of notes that are past due as of December 31, 2022. 

Schedule of Convertible Debts and Outstanding Balances

Notes:

As of December 31, 2022, the approximate principal balance that are secured by the assets of the Company’s subsidiary, PBI Agrochem, Inc. is $352,188.

During the year ended December 31, 2022, the Company extended 11 loans totaling $1,815,000 and increased the principal to $3,024,561. The Company issued 1,423,800 shares of common stock for these extensions and added principal.

Standstill and Forbearance Agreements

The Company has entered into Standstill and Forbearance Agreements with lenders who hold variable-rate convertible notes with a total principal as of December 31, 2022 of $574,984. Pursuant to the Standstill and Forbearance Agreements, the lenders agreed to not convert any portion of their notes into shares of common stock at a variable rate until March 31, 2021 for convertible notes with a principal balance of $469,000 and until April 16, 2021 for convertible notes with a principal balance of $1.1 million. During the year ended December 31, 2022, the Company settled one note with total principal of $166,703, leaving two final lenders (four notes) with total principal of $574,984 outstanding and incurred interest, penalties and fees of approximately $0.8 million in connection with the Standstill and Forbearance Agreement. During the year ended December 31, 2021, the Company settled three lenders (five notes) with a total principal of $827,500 and incurred interest, penalties, and fees of approximately $1.47 million in connection with the Standstill and forbearance agreements.

Convertible Loan Modifications and Extinguishments

We refinanced certain convertible loans during the years ended December 31, 2022 and 2021 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 period 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 in 2022 and 2021. We recorded losses on extinguishment of liabilities of $751,335 in 2022 and $1,061,073 in 2021. Our gains and losses were measured by calculating the difference of the fair value of the new debt and the carrying value of the old debt.

Other Debt

On October 11, 2019 we received a non-convertible loan with a one month term and a 2% interest charge for $25,000 from a private investor. In the year ended December 31,2021 the Company issued 17 shares of Series AA preferred stock and 17,000 warrants to acquire common stock (five year term and $3.50 exercise price) to the investor to settle principal and interest on this loan.

No notes in Other Debt are past due as of December 31, 2022.

 Schedule of Other Debt

Notes:

Related Party Debt

Schedule of Related Party Debt 

Notes:

During the year ended December 31, 2022, we received short-term non-convertible loans of $958,100 with $91,750 OID from related parties and repaid $315,300 of related party loans. These notes bear interest ranging from 12% to 120% interest and are due upon demand.

During the year ended December 31, 2021, we received short-term non-convertible loans of $254,600 from related parties and repaid $354,600 of related party loans. These notes bear interest ranging from 0% to 15% interest and are due upon demand. In this period we also issued 69.5 shares of Series AA preferred stock and 69,450 warrants to acquire common stock (five-year term and $3.50 exercise price) to settle $66,000 principal and $107,625 interest (see Note 10).

We amortized $83,835 and $49,564 of debt discounts during the years ended December 31, 2022 and 2021, respectively for all non-convertible notes. The total unamortized discount for all non-convertible notes as of December 31, 2022 and 2021 was $7,915 and $0, respectively.