Convertible Debentures, and Loans Payable

12 Months Ended

Dec. 31, 2021

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, 2021:

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.
8/31/11		8/31/13		5	%		10,000		(4,286	)		-		-			-		-		(1	)
12/01/17		12/31/21		6	%		50,000		(12,500	)		-		-			-		-		(2	)
12/05/17		12/31/21		6	%		50,000		(12,500	)				-							(3	)
9/03/21		9/03/24		8	%		346,500		(12,355	)		346,500		(10,639	)		335,861		9,240		(4	)
9/03/21		9/03/24		8	%		3,500		(125	)		3,500		(107	)		3,393		92		(5	)
											$	350,000	$	(10,746	)	$	339,254	$	9,332

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		12/31/20		6	%		50,000		(12,500	)		50,000		—		50,000		9,250		(2	)
12/05/17		12/31/20		6	%		50,000		(12,500	)		50,000		—		50,000		9,218		(3	)
											$	110,000	$	—	$	110,000	$	23,162

(1)

The Company borrowed $10,000 in exchange for a convertible note (the “Hoboken Convertible Note”). The holder 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. On February 22, 2021, this note and accrued interest of $4,777 were converted by the holder for 422,209 shares of common stock in accordance with the terms of the note.

(2)

On December 1, 2017, the Company issued a $50,000 principal amount 6% secured convertible promissory note, initially due December 1, 2018, subject to extension. The note is secured with such assets of the Company equal to the principal and accrued interest, is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Mr. 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. On June 10, 2021, this note and accrued interest of $10,554 were converted by the holder for 6,055,358 shares of common stock in accordance with the terms of the note.

(3)	On December 5, 2017, the Company issued a $50,000 principal amount 6% secured convertible promissory note, initially due December 4, 2018, subject to extension. The note is secured with such assets of the Company equal to the principal and accrued interest, is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Mr. 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. The maturity date was further extended to December 31, 2021. On August 18, 2021, this note and accrued interest of $11,145 were converted by the holder for 6,114,516 shares of common stock in accordance with the terms of the note.
(4)	On September 3, 2021, the Company issued a $346,500 note payable to Summit Holding V, LLC as part of the acquisition of SSI. The note carries 8% unsecured convertible promissory note, due September 3, 2024. Payments on the note are to be equivalent to 50% of the adjusted net profit of Submersible Systems, Inc., payable calendar quarterly commencing on December 31, 2021. Interest is payable in company stock at the conversion price of $.051272 and shall be paid quarterly. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $.051272 at any time up to the maturity date of the note. The Company recorded $12,355 for the beneficial conversion feature.
(5)	On September 3, 2021, the Company issued a three-year 8% unsecured convertible promissory note for $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. Payments on the note are to be equivalent to 50% of the adjusted net profit of SSI, payable calendar quarterly commencing on December 31, 2021. Interest is payable quarterly in common stock of the Company at the conversion price of $.051272 per share. The note holder may convert any outstanding principal and unpaid interest at a conversion rate of $.051272 at any time up to the maturity date of the note. The Company recorded $125 for the beneficial conversion feature.

Loans Payable

Gonzales Note

The Company entered into a non-interest-bearing loan agreement of $200,000 with Tom Gonzales on July 1, 2013.The loan is payable upon demand. During the years ended December 31, 2020 and 2020, the Company repaid $40,000 and $60,000 respectively. The loan balance was $0 and $40,000 as of December 31, 2021 and 2020, respectively.

Hoboken Note

The Company issued an unsecured, non-interest-bearing note of $10,000 with Hoboken Street Association on October 15, 2016. The note was forgiven as part of the conversion of the Hoboken Convertible Note on February 22, 2021 as described above. The Company recorded a gain on settlement of debt of $10,000. The note balance as of December 31, 2021 and December 31, 2020 was $0 and $10,000, respectively

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. The Company 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 $25,079 as of December 31, 2021 and $60,070 as of December 31, 2020.

	Payment Amortization
2022		25,079
Total Loan Payments	$	25,079
Current portion of Loan payable		(25,079	)
Non-Current Portion of Loan Payable	$	-

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 loan balance as of December 31, 2021 was $43,122 and $52,118 as of December 31, 2020.

	Payment Amortization
2022		11,168
2023		11,168
2024		11,168
2025 and thereafter		9,618
Total note payments	$	43,122
Current portion of note payable		(11,168	)
Non-Current Portion of notes payable	$	31,954

Navitas Note

On May 19, 2021, the Company, through its wholly owned subsidiary BLU3, executed an equipment finance agreement to finance the purchase of certain plastic molding equipment through Navitas Credit Corp. (“Navitas”). The amount financed is $75,764 payable over 60 equal monthly installments of $1,611 (the “Navitas Note”). The equipment finance agreement contains customary events of default. The agreement was fully funded as of December 31, 2021.

	Payment Amortization
2022		14,155
2023		15,342
2024		16,629
2025		18,024
Balance		6,007
Total Note Payments	$	70,157
Current portion of Note payable		(14,155	)
Non-Current Portion of Note Payable	$	56,002

PPP Loan

On May 12, 2020, we received an unsecured loan from South Atlantic Bank 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. On April 28, 2021, the Company was notified by South Atlantic Bank that the SBA Loan was forgiven in full under the terms of the CARES Act. The company recorded the forgiveness as a gain on the forgiveness of the PPP loan of $159,600 on our consolidated income statement.

The note balance as of December 31, 2021 and December 31, 2020 was $0 and $159,600, respectively.

PPP Loan – Submersible Systems, Inc.

On May 12, 2020, SSI received an unsecured loan from City National Bank in the principal amount of $116,160 (the “Submersible SBA Loan”), under the CARES Act.

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 Submersible SBA Loan carries a fixed interest rate of one percent per year, and a monthly payment of $6,925, with the first payment due seven months from the date of initial cash receipt. As part of the forgiveness application and directly related to the acquisition of SSI by the Company, SSI was required to place $121,953 in an escrow account until forgiveness is determined and City National Bank has been paid in full by the SBA. On October 15, 2021, the Company was notified by City National Bank that the Submersible SBA Loan was forgiven in full under the terms of the CARES Act. The restricted cash in escrow was released in full by the bank as a result of this forgiveness on November 8, 2021.

The note balance as of December 31, 2021 and December 31, 2020 was $0 and $116,160 respectively.