Convertible Debentures and Loans Payable

12 Months Ended

Dec. 31, 2020

Debt Disclosure [Abstract]

Convertible Debentures and Loans Payable

Note 10. Convertible Debentures, and Loans Payable

Convertible Debentures

Convertible debentures consist of the following at December 31, 2020:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Original Discount Balance			Period End Principal Balance		Period End Discount Balance		Period End Balance, Net		Accrued Interest Balance		Reg.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		4,694		(1	)
12/01/17	12/31/21		6	%		50,000		(12,500	)		50,000		—		50,000		9,250		(2	)
12/05/17	12/31/21		6	%		50,000		(12,500	)		50,000		—		50,000		9,218		(3	)
										$	110,000	$	—	$	110,000	$	23,162

Convertible debentures consist of the following at December 31, 2019:

Origination Date	Maturity Date	Interest Rate			Origination Principal Balance		Original Discount Balance			Period End Principal Balance		Period End Discount Balance		Period End Balance, Net		Accrued Interest Balance		Reg.
8/31/2011	8/31/2013		5	%		10,000		(4,286	)		10,000		—		10,000		4,194		(1	)
12/01/17	12/31/20		6	%		50,000		(12,500	)		50,000		—		50,000		6,250		(2	)
12/05/17	12/31/20		6	%		50,000		(12,500	)		50,000		—		50,000		6,218		(3	)
										$	110,000	$	—	$	110,000	$	16,662

(1)	The Company borrowed $10,000 in exchange for a convertible debenture. The lender at its option may convert all or part of the note plus accrued interest into common stock at a price of 30% discount as determined from the average four highest closing bid prices over the preceding five trading days. The Company valued the beneficial conversion feature of the convertible debenture at $4,286, which was accreted to interest expense over the period of the note. As of February 22, 2021 the noteholder requested conversion and the note was converted into 422,209 shares at a conversion price of $.035 per share.
(2)	On December 1, 2017 the Company entered into a $50,000 principal amount 6% secured convertible promissory note, due December 1, 2018, subject to extension. The note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert M. Carmichael.
	The conversion price under the note initially ranged from $0.02 per share if converted in the first year to $0.125 per share if converted in year five. The lender may convert at any time until the note plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding common stock of the Company at any one time. In 2019, the maturity date of the note was extended for one additional year to December 31, 2019 with a reduction in the conversion price to $0.01 per share. The Company recorded a loss on extinguishment of debt of $32,000 upon the modification of conversion price. Subsequent to December 31, 2019, the maturity date was further extended to December 1, 2020 and on December 21, 2020, the maturity date was further extended to December 31, 2021.

(3)

On December 5, 2017 the Company entered into a $50,000 principal amount 6% secured convertible promissory note, due December 4, 2018, subject to extension. The note is secured with such assets of the Company equal to the principal and accrued interest, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert M. Carmichael.

The conversion price under the note initially ranged from $0.02 per share if converted in the first year to $0.125 per share if converted in year five. The lender may convert at any time until the note plus accrued interest is paid in full. Various other fees and penalties apply if payments or conversions are not done timely by the Company. The lender will be limited to maximum conversion of 9.99% of the outstanding common stock of the Company at any one time. In 2019, the note was extended for one additional year to December 31, 2019 with a reduction in the conversion price to $0.01 per share. The Company recorded a loss on extinguishment of debt of $99,000 upon the modification of conversion price. Subsequent to December 31, 2019, the maturity date was further extended to December 31, 2020 2020 and on December 21, 2020, the maturity date was further extended to December 31, 2021.

Loans Payable

Gonzales Note

The Company entered into a non-interest-bearing loan agreement of $200,000 with Mr. Tom Gonzales on July 1, 2013.The loan is payable upon demand. During the years ended December 31, 2020 and 2019, the Company repaid $60,000 and $16,572 respectively. The loan balance was $40,000 and $100,000 as of December 31, 2020 and 2019 respectively.

Hoboken Note

The Company entered into a non-interest-bearing loan of $10,000 with Hoboken Street Association on October 15, 2016. The loan balance was $10,000 as of December 31, 2020 and 2019 respectively. On February 22, 2021 the debt on this note was forgiven as part of the conversion of the convertible note due to Hoboken Street Association as discussed in the convertible note section above.

Marlin Note

On September 30, 2019 BLU3 financed the purchase of certain plastic molding equipment through Marlin Capital Solutions (“Marlin Capital”). The loan amount at inception was $96,725. It entered into an Equipment Finance Agreement with Marlin Capital pursuant to which it agreed to make 36 equal monthly installments of $3,143.80. The Equipment Finance Agreement contains customary events of default. The loan balance was $60,070 as of December 31, 2020.

	Payment Amortization
2021	$	32,975
2022		27,095
Total Loan Payments	$	60,070
Current portion of Loan payable		(32,975	)
Non-Current Portion of Loan Payable	$	27,095

Mercedes Benz Note

On August 21, 2020 the Company executed an installment sales contract with Mercedes Benz Coconut Creek for the purchase of a 2019 Mercedes Benz Sprinter delivery van. The installment agreement is for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Mr. Carmichael. The first payment was due on October 5, 2020. The loan balance as of December 31, 2020 was $52,118.

	Payment Amortization
2021	$	11,168
2022		11,168
2023		11,168
2024		11,168
2025 and thereafter		7,446
Total note payments	$	52,118
Current portion of note payable		(11,168	)
Non-Current Portion of notes payable	$	40,950

PPP Loan

On May 12, 2020, we received an unsecured loan from Bank United in the principal amount of $159,600 (the “SBA Loan”), under the Paycheck Protection Program (“PPP”), which was established under the recently enacted Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S. Small Business Administration. The intent and purpose of the PPP is to support companies, during the COVID-19 pandemic, by providing funds for certain specified business expenses, with a focus on payroll. As a qualifying business as defined by the SBA, we used the proceeds from this loan to primarily help maintain our payroll and cover our rent and utilities as we navigated our business through the lockdowns associated with the COVID-19 pandemic until our return to normal operations earlier in 2020.

The term of the note is two years, though it may be payable sooner in connection with an event of default under the note. The SBA Loan carries a fixed interest rate of one percent per year, and a monthly payment of $8,983, with the first payment due seven months from the date of initial cash receipt. Under the CARES Act and the PPP, certain amounts of loans made under the PPP may be forgiven if the recipients use the loan proceeds for eligible purposes, including payroll costs and certain rent or utility costs, and meet other requirements regarding, among other things, the maintenance of employment and compensation levels. We used the SBA Loan for qualifying expenses and have applied for forgiveness of the SBA Loan in accordance with the terms of the CARES Act. The loan balance as of December 31, 2020 was $159,600.

The Company has applied for forgiveness through its lender, and the application has been processed. The Company expects the entire balance of the loan to be forgiven under the parameters of the CARES Act. The lender has waived any payments on this loan, until a decision on forgiveness is rendered by the U.S. Small Business Administration.

	Payment Amortization
2021	$	106,893
2022		52,737
Total loan payments	$	159,600
Current portion of SBA Loan payable		(106,863	)
Non-Current Portion of SBA Loan payable	$	52,737