NOTES PAYABLE

9 Months Ended

Sep. 30, 2023

Restructuring Cost and Reserve [Line Items]

NOTES PAYABLE

NOTE 9 – NOTES PAYABLE

The Company borrows funds from various creditors to finance its equipment, operations, and acquisitions. The collateralized loans below are secured by interest in the financed equipment.

The Company’s notes payables balance as of September 30, 2023 and December 31, 2022, consisted of the following:

		September 30,						December 31,
		2023						2022
		Current			Non-current			Current			Non-current
Loans:
WTI Global Inc.	(a)	$	-		$	-		$	170,000		$	-
Collateralized Loans:
Peoples United	(b)		21,761			-			177,539			-
M&T Bank	(c)		130,193			222,488			121,927			321,192
Daimler Truck	(d)		69,143			-			74,873			53,429
Ascentium Capital	(e)		158,257			468,563			152,467			587,991
Balboa Capital	(f)		41,810			147,701			38,895			179,433
Blue Bridge Financial	(g)		11,383			42,286			10,394			50,951
Channel Equipment Finance	(h)		17,503			103,389			-			-
Financial Pacific	(i)		31,108			109,643			29,187			133,220
M2 Equipment	(j)		42,177			146,067			39,527			178,039
Meridian Equipment Finance	(k)		27,358			92,851			25,518			113,606
Navitas	(l)		39,055			129,142			36,791			158,723
Pawnee	(m)		44,761			159,766			41,480			193,759
Signature	(n)		81,439			312,499			73,973			374,921
Trans Lease	(o)		43,586			124,485			40,524			157,569
Verdant	(p)		46,446			134,286			44,324			169,390
Western Equipment	(q)		44,027			153,220			41,186			186,605
Issued prior to Titan Merger:
Michaelson Capital	(r)		2,732,090			-			-			-
Loanbuilder	(s)		87,596			123,477			-			-
Individual	(t)		25,000			-			-			-
Kabbage Loans	(u)		36,079			-			-			-
Baxter Credit Union	(v)		-			-			-			-
Related Parties:
Titan Holdings 2	(w)		-			633,470			-			-
Total outstanding principal			3,730,772			3,103,333			1,118,605			2,858,828
Less: discounts			(7,934	)		(73,296	)		(20,447	)		(73,297	)
Total notes payable			3,722,838			3,030,037			1,098,158			2,785,531
Less: Notes payable – related parties			-			633,470			-			-
Notes payable		$	3,722,838		$	2,396,568		$	1,098,158		$	2,785,531

(a)	On December 15, 2022, Titan entered into a $170,000 promissory note agreement with WTI Global Inc. (“WTI”) at a 7% per annum interest rate. The promissory note was issued as consideration for the acquisition of intangible assets from WTI (Note 5 – Intangible Assets). On February 1, 2023, WTI agreed to cancel the promissory note in exchange for an ownership interest in the Company. The cancellation was recorded on the condensed consolidated balance sheet as an equity contribution (See Note 13 – Stockholders’ Equity).
(b)	On December 10, 2021, Titan entered into a collateralized loan agreement for $354,876 with Peoples United Bank at a 5.75% per annum interest rate. The loan has a maturity date of November 10, 2023 and requires monthly payments of $16,614.
(c)	Titan entered into a collateralized loan on December 23, 2022 with M&T Bank which matures on February 23, 2025. The loan has an interest rate of 8.78% and the Company remits monthly payments of $13,000 with a balloon payment at maturity of $176,497.
(d)	On February 12, 2018, Titan entered into a collateralized loan agreement with Daimler Trucks for $131,940, with a maturity date of May 14, 2023. Titan made monthly payments of $2,487 towards principal and interest. Interest accrued at a rate of 4.95% per annum. As of September 30, 2023 this loan had been fully paid off. On June 3, 2019, Titan entered into another collateralized loan agreement with Daimler Trucks for $160,601, with a maturity date of September 3, 2024. Titan makes monthly payments of $2,795 towards principal and interest. Interest accrues at a rate of 6% per annum. On June 14, 2019, Titan entered into another collateralized loan agreement with Daimler Trucks for $155,740, with a maturity date of September 29, 2024. Titan makes monthly payments of $2,762 towards principal and interest. Interest accrues at a rate of 6% per annum.
(e)	On May 5, 2022, Titan entered into an equipment financing agreement with Ascentium Capital for $250,000, which matures on May 5, 2027. Titan makes monthly payments of $4,812 towards principal and interest. Interest accrues at a rate of 5.82% per annum. On May 10, 2022, Titan entered into an equipment financing agreement with Ascentium Capital for $259,646, which matures on May 10, 2027. The Company makes monthly payments of $4,753 towards principal and interest. Interest accrues at a rate of 3.75% per annum. On June 5, 2022, Titan entered into an equipment financing agreement with Ascentium Capital for $311,795, which matures on June 5, 2027. Titan makes monthly payments of $5,935 towards principal and interest. Interest accrues at a rate of 5.36% per annum.
(f)	On August 13, 2022, Titan entered into a collateralized loan agreement with Balboa Capital for $230,482, which matures five years from the commencement date. Titan makes monthly payments of $4,860 towards principal and interest. Interest accrues at a rate of 9.68% per annum.
(g)	On August 11, 2022, Titan entered into an equipment finance agreement with Blue Bridge Financial for $64,539, which matures five years from the commencement date. Titan makes monthly payments of $1,442 towards principal and interest. Interest accrues at a rate of 12.18% per annum.
(h)	On September 19, 2023, Titan entered into an equipment finance agreement with Channel Equipment Finance for $123,574, which matures on August 28, 2028. Titan makes monthly payments of $3,051 towards principal and interest. Interest accrues at a rate of 16.69% per annum.
(i)	On July 15, 2022, Titan entered into an equipment financing agreement with Financial Pacific for $74,841, which matures five years from commencement. Titan makes monthly payments of $1,585 towards principal and interest. Interest accrues at a rate of 9.87% per annum. On October 15, 2022, Titan entered into an additional equipment financing agreement with Financial Pacific for $95,127, which matures five years from commencement. Titan makes monthly payments of $1,906 towards principal and interest. Interest accrues at a rate of 7.49% per annum.
(j)	On August 10, 2022, Titan entered into an equipment financing agreement with M2 Equipment for $230,000, which matures five years from commencement. Titan makes monthly payments of $4,739 towards principal and interest. Interest accrues at a rate of 8.68% per annum.
(k)	On August 16, 2022, Titan entered into an equipment financing agreement with Meridian for $149,076, which matures five years from commencement. Titan makes monthly payments of $3,118 towards principal and interest. Interest accrues at a rate of 9.32% per annum.

(l)	On July 23, 2022, Titan entered into an equipment financing agreement with Navitas for $210,000, which matures five years from commencement. Titan makes monthly payments of $4,257 towards principal and interest. Interest accrues at a rate of 7.99% per annum.
(m)	On August 15, 2022, Titan entered into an equipment financing agreement with Pawnee Leasing Corp. for $248,157, which matures five years from commencement. Titan makes monthly payments of $5,296 towards principal and interest. Interest accrues at a rate of 10.19% per annum.
(n)	On June 22, 2022, Titan entered into a collateralized loan agreement with Signature Bank for $284,951, which matures six years from commencement. Titan makes monthly payments of $4,849 towards principal and interest. Interest accrues at a rate of 6.93% per annum. On September 15, 2022, Titan entered into a collateralized loan agreement with Signature Bank for $191,250, which matures five years from commencement. Titan makes monthly payments of $3,901 towards principal and interest. Interest accrues at a rate of 8.25% per annum.
(o)	On August 20, 2022, Titan entered into a collateralized loan agreement with Trans Lease, Inc. for $210,750, which matures five years from commencement. Titan makes monthly payments of $4,838 towards principal and interest. Interest accrues at a rate of 9.75% per annum.
(p)	On April 27, 2022, Titan entered into a collateralized debt agreement with Verdant Commercial Capital for $241,765, which matures five years from commencement. Titan makes monthly payments of $4,702 towards principal and interest. Interest accrues at a rate of 6.25% per annum.
(q)	On August 15, 2022, Titan entered into an equipment financing agreement with Western Equipment Capital for $240,726, which matures five years from commencement. Titan makes monthly payments of $4,989 towards principal and interest. Interest accrues at a rate of 8.93% per annum.
Note Payables issued prior to Titan Merger:
(r)	On January 5, 2023 the Company completed its asset acquisition of the Recoup Digester Assets and as part of the consideration, assumed the liabilities of a $3,017,090 Secured Promissory Note owed to Michaelson Capital Special Finance Fund II, L.P. (“Michaelson”). The Company and Michaelson agreed to amend and restate the Secured Promissory Note, as well as sign a related Forbearance Agreement (together known as the “Michaelson Note”). The Michaelson Note has a 12% per annum interest rate. The Michaelson Note has the following terms: (1) the Company is to make monthly interest payments for the interest amounts owed, (2) the Company is to make monthly principal payments of $35,000, (3) the Company is to make a $250,000 principal repayment due as of December 31, 2023, and (4) the Company is to repay all other outstanding amounts owed by December 31, 2023. In October of 2023 the Company and Michaelson agreed to forbear the principal payments owed to Michaelson until October 30, 2023 (Note 16 – Subsequent Events).
(s)	Between January 14, 2022 and July 6, 2022 the Company signed four loan agreements with the Loanbuilder service of Paypal, Inc (the “Loanbuilder Notes”). Three of the four Loanbuilder Notes were settled prior to May 19, 2023. The remaining note (“Loanbuilder – 3”) was in default on May 19, 2023. On May 19, 2023, the outstanding liabilities owed due to the Loanbuilder Notes was $299,710, inclusive of $50,599 owed due to Loanbuilder – 3. On June 15, 2023, the Company agreed to settle Loanbuilder – 3. In accordance with ASC 470-60, “Troubled Debt Restructuring by Debtors” each of the Loanbuilder notes is accounted for as a troubled debt restructuring due to their respective settlement agreements. As a result of the Loanbuilder - 3 settlement, the Company recorded a net gain on extinguishment of debt of $25,299 in the consolidated statement of operations for the nine months ending September 30, 2023. Additionally, the Company agreed to pay the lender $6,325 in four monthly payments beginning in June 2023. Excluding the Loanbuilder - 3 repayments, and as of September 30, 2023, the Company has 31 remaining required monthly repayments of $6,046 and 19 remaining required monthly repayments of $1,545 for the other Loanbuilder Notes.
(t)	On May 16, 2022, the Company issued a $25,000 promissory note (the “Individual #1 Note”) with an individual private investor. The Individual Note has an annual interest rate of 12% per annum and matures on December 31, 2023, at which time all principal and accrued interest is owed. In the event of default, the promissory note incurs additional interest of 0.5% on all outstanding principal and interest owed.
(u)	On September 28, 2022 and September 29, 2022 the Company agreed to two Kabbage Funding Loan Agreements (together known as the “Kabbage Loans”) owed to American Express National Bank. The Kabbage Loans had an initial principal value of $120,800 and as of May 19, 2023 had a principal amount of $77,748. Each loan includes a cost of capital interest expense of $4,077 and is to be repaid in nine monthly repayments of $3,658, followed by nine monthly payments of $35,507.

(v)	The Company signed a revolving loan with Baxter Credit Union, which was renewed on April 26, 2023, with a principal liability of $99,995. The loan had an annual interest rate of 8.50% and a maturity date of July 30, 2023, at which point all principal and accrued interest was due and payable. As of September 30, 2023 this loan was fully repaid.
Related Parties:
(w)	On April 30th, 2023, Titan signed a promissory note (the “Titan Holdings 2 Note”) with Titan Holdings 2, LLC (“Titan Holdings 2”), a stockholder of the Company. The Titan Holdings 2 Note has an interest rate of 10.5% per annum, which shall increase by 0.5% on each twelve-month anniversary of the Titan Holdings 2 Note’s signing, not to exceed an interest rate of 12.5% per annum. The Titan Holdings 2 Note has a principal amount of $562,470, requires monthly payments of the interest accrued, and requires the repayment of all outstanding principal amounts within five years of issuance. Titan has an informal agreement with Titan Holdings 2 to continually borrow from Titan Holdings 2 as working capital needs arise. These additional funds are to be repaid as funding becomes available. As of September 30, 2023, Titan had borrowed $248,692 in additional funding.

Interest expense on these notes for the nine months ended September 30, 2023 was $391,735. Interest expense on these notes for the nine months ended September 30, 2022 was $111,597.

Principal maturities for the next five years and thereafter as of September 30, 2023 were as follows:

Remainder of 2023	$	3,038,298
2024		910,150
2025		956,601
2026		773,061
2027		472,417
Thereafter		683,579
Total principal payments	$	6,834,106
Less: debt discounts		(81,230	)
Total notes payable	$	6,752,876

Paycheck Protection Program Note Forgiveness

Titan applied for and received loans from the Paycheck Protection Program (the “PPP”) in the amounts of $406,152 and $406,152, received on May 5, 2020 and February 1, 2021, respectively. On January 31, 2022 and March 21, 2022, Titan received notices that the entire balances of the loans plus any accrued interest were forgiven and recorded a gain on forgiveness of $812,304 during the year ended December 31, 2022 included in other income in the condensed consolidated statement of operations.

Titan Trucking LLC [Member]

Restructuring Cost and Reserve [Line Items]

NOTES PAYABLE

NOTES 9 – NOTES PAYABLE

The Company borrows funds from various creditors to finance equipment and vehicles and acquisitions consisting of the following:

						December 31, 2022				December 31, 2021
Lender	Maturity Date	Interest Rate		Monthly Payment		Short-Term		Long-Term		Short-Term		Long-Term
			%		$		$		$		$		$
Loans
Fifth Third Bank (PPP)**	2/8/22 - 5/24/22		-		-		-		-		812,304		-
WTI Global	On demand		7.00		-		170,000		-		-		-
Collateralized Loans
Peoples United	11/10/23		5.75		16,614		177,539		-		165,337		177,539
M&T Bank	2/23/25		8.78		13,000		121,927		321,192		128,191		443,120
Daimler Truck	5/14/23 - 9/29/23		4.95 - 6.00		2,487 - 2,762		74,873		53,429		138,374		216,560
Ascentium Capital	5/5/27 - 6/5/27		3.75 - 5.82		4,812 - 5,935		152,467		587,991		-		-
Balboa Capital	8/13/27		9.68		4,860		38,895		179,433		-		-
Blue Bridge Financial	8/10/27		12.18		1,442		10,394		50,951		-		-
Financial Pacific	7/15/27 - 10/15/27		7.49 - 9.87		1,585 - 1,906		29,187		133,220		-		-
M2 Equipment	8/10/27		8.68		4,739		39,527		178,039		-		-
Meridian Equipment	7/12/27		9.32		3,118		25,518		113,606		-		-
Navitas	7/23/27		7.99		4,257		36,791		158,723		-		-
Pawnee	8/15/27		10.19		5,296		41,480		193,759		-		-
Signature	9/15/27 - 6/30/28		6.93 - 8.25		3,901 - 4,842		73,973		374,921		-		-
Trans Lease	2/20/27		9.75		4,838		40,524		157,569		-		-
Verdant	4/27/27		6.25		4,702		44,324		169,390		-		-
Western Equipment	8/15/27		8.93		4,989		41,186		186,605		-		-
Related Parties
Titan Property	On demand		-		-		-		-		1,204,532		-
C. and M. Rizzo	On demand		3.00		-		-		-		500,000		-
M. Rizzo	On demand		1.90		-		-		-		1,785,451		-
J. Rizzo	On demand		5.00		-		-		-		170,881		-
							1,118,605		2,858,828		4,905,070		837,219

Principal maturities for the next five years and thereafter:

2023	1,118,605
2024	806,510
2025	857,789
2026	723,597
2027	442,419
Thereafter	28,514
Total principal payments	3,977,434
Less: debt issuance costs	(93,745	)
Total notes payable	3,883,689

** The Company applied for and received loans from the Paycheck Protection Program (the “PPP”) in the amounts of $406,152 and $406,153, received on May 5, 2020 and February 1, 2021, respectively. On January 31, 2022 and March 21, 2022, the Company received notices that the entire balances of the loans plus any accrued interest were forgiven and recorded in the consolidated statement of operations as forgiveness of $812,305 during the year ended December 31, 2022.

TITAN TRUCKING, LLC AND SUBSIDIARY

A LIMITED LIABILITY COMPANY

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021