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Convertible Promissory Notes and Notes Payable
 9 Months Ended
Sep. 30, 2022
Debt Disclosure [Abstract]  
Convertible Promissory Notes and Notes Payable

Note 5. Convertible Promissory Notes and Notes Payable

 

Convertible Promissory Notes

 

Convertible promissory notes consisted of the following at September 30, 2022:

 

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. 
12/01/17  12/31/21   6%   50,000    (12,500)   -    -    -    -    (1)
12/05/17  12/31/21   6%   50,000    (12,500)   

-

    -    -    -    (2)
9/03/21  9/03/24   8%   346,500    (12,355)   346,500    (7,903)   338,597    -    (3)
9/03/21  9/03/24   8%   3,500    (125)   3,500    (76)   3,424    -    (4)
9/30/22  Demand   8%   66,793    (19,245)   66,793    (19,250)   47,543    -    (5)
                     $416,793   $(27,229)  $389,564   $-      

 

(1) On December 1, 2017, the Company issued a 6% secured convertible promissory note in the principal amount of $50,000, initially due December 1, 2018, subject to extension, which was granted until the note was converted. The note is secured by the assets of the Company and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert Carmichael.
   
  The conversion price of 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 noteholder may convert the note 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 timely made by the Company. The lender was 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 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, the note and accrued interest of $10,554 were converted by the holder into 6,055,358 shares of common stock in accordance with the terms of the note.
(1) On December 1, 2017, the Company issued a 6% secured convertible promissory note in the principal amount of $50,000, initially due December 1, 2018, subject to extension. The note is secured by the assets of the Company and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert Carmichael. The conversion price of 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 noteholder may convert the note 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 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, the note and accrued interest of $10,554 were converted by the holder into 6,055,358 shares of common stock in accordance with the terms of the note.
   
(2) On December 5, 2017, the Company entered into a 6% secured convertible promissory note in the principal amount of $50,000, 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, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert 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 was 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 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. On August 18, 2021, this note and accrued interest of $11,145 were converted by the holder into 6,114,516 shares of common stock in accordance with the terms of the note.
(2) On December 5, 2017, the Company entered into a 6% secured convertible promissory note in the principal amount of $50,000, 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, and is guaranteed by the Company’s wholly-owned subsidiaries, Trebor and BHP and the personal guarantee of Robert 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 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. On August 18, 2021, this note and accrued interest of $11,145 were converted by the holder into 6,114,516 shares of common stock in accordance with the terms of the note

 

 

(3) On September 3, 2021, the Company issued a three-year 8% convertible promissory note in the principal amount of $346,550 to Summit Holding V, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in shares of common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and interest at a conversion price of $0.051272 per share at any time during the term of the note. The Company recorded $12,355 for the beneficial conversion feature. This note is classified as a long-term liability for this period.
   
(4) On September 3, 2021, the Company issued a three-year 8% promissory note in the principal amount of $3,500 to Tierra Vista Partners, LLC as part of the acquisition of SSI. The Company is required to make quarterly payments under the note in an amount equal to 50% of the adjusted net profit of SSI. Interest is payable quarterly in common stock of the Company at a conversion price of $0.051272 per share. The note holder may convert outstanding principal and unpaid interest at a conversion price of $0.051272 at any time up to the maturity date of the note. The Company recorded $125 for the beneficial conversion feature. This note is classified as a long-term liability for this period.
   
(5) On September 30, 2022, the Company issued a convertible demand 8% promissory note in the principal amount of $66,793 to Robert Carmichael for funds to meet the working capital needs of LBI. There is no amortization schedule for the note, and interest is payable in shares of common stock of the Company at a conversion price equal to the 90 day VWAP of the Company’s stock prior to the quarterly interest payment date. This note is classified as a current liability as the note holder may demand payment or convert the outstanding principal at a conversion rate of $0.021 per share at any time. The Company recorded $19,250 for the beneficial conversion feature.

 

Loan Payable

 

Marlin Note

 

On September 30, 2019 the Company, through its wholly owned subsidiary BLU3, executed an equipment finance agreement for the purchase of certain plastic molding equipment through Marlin Capital Solutions. The initial principal balance was $96,725 payable in 36 equal monthly installments of $3,144. The equipment finance agreement contains customary events of default. The loan balance was $3,116 as of September 30, 2022.

 

      
   Payment Amortization 
2022 (3 months remaining)   3,116 
Total Loan Payments  $3,116 
Current portion of Loan payable   (3,116)
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 was for $55,841 with a zero interest rate payable over 60 months with a monthly payment of $931 and is personally guaranteed by Robert Carmichael. The first payment was due on October 5, 2020. The loan balance was $33,815 as of September 30, 2022. .

 

      
   Payment Amortization 
2022 (3 months remaining)  $2,793 
2023  $11,168 
2024  $11,168 
2025 and thereafter  $8,684 
Total note payments  $33,815 
Current portion of note payable  $(11,168)
Non-Current Portion of notes payable  $22,647 

 

 

Navitas Note

 

On May 19, 2021 the Company, through its wholly owned subsidiary BLU3, executed an equipment finance agreement for the purchase of certain plastic molding equipment through Navitas Credit Corp. (“Navitas”). The amount financed is $79,309 payable in 60 equal monthly installments of $1,611. The equipment finance agreement contains customary events of default. The agreement was fully funded as of September 30, 2021.

 

      
   Payment Amortization 
2022 (3 months remaining)   3,386 
2023   15,342 
2024   16,629 
2025   18,204 
2026   6,007 
Total Note Payments  $58,568 
Current portion of Note payable   (15,036)
Non-Current Portion of Note Payable  $43,532 

 

Alliance Lease

 

On January 19, 2022, SSI entered into a capital lease with Alliance Funding Group (“Lessor”) to secure a new piece of essential equipment for its operations. The lease has a 36 month term with a monthly payment of $3,522. At the end of the lease SSI has the option to purchase the equipment for $3,522 plus applicable taxes. The total purchase price of the equipment was $108,675. The vendor was unable to supply the equipment, and the purchase order for this equipment was cancelled in May 2022. The Lessor initially funded 50% of the purchase price, or approximately $54,000, directly to the vendor which the vendor has committed to return once properly instructed by the Lessor. This lease was cancelled effective June 29, 2022. For the nine months ended September 30, 2022, the Company wrote off approximately $6,300 related to fees for cancellation of this financing.

 

NFS Note

 

On June 29, 2022, SSI executed an equipment financing agreement with NFS Leasing (“NFS Leasing”) to secure replacement production molds. The total purchase price of the molds was $84,500 of which $63,375 was financed by NFS Leasing on August 15, 2022. The financing agreement has a 33 month term beginning in August 2022 with a monthly payment of $2,571. The financing agreement contains customary events of default, is guaranteed by the Company and NFS Leasing has a lien on all of the assets of SSI.

 

      
   Payment Amortization 
2022 (3 months remaining)   2,571 
2023   22,197 
2024   26,279 
2025 (5 months)   12,329 
Total Note Payments  $63,376 
Current portion of Note payable   (18,863)
Non-Current Portion of Note Payable  $44,513