ADVANCES, NON-CONVERTIBLE NOTES PAYABLE, AND PPP NOTE PAYABLE

12 Months Ended

Dec. 31, 2023

Advances Non-convertible Notes Payable And Ppp Note Payable

ADVANCES, NON-CONVERTIBLE NOTES PAYABLE, AND PPP NOTE PAYABLE

NOTE 8 – ADVANCES, NON-CONVERTIBLE NOTES PAYABLE, AND PPP NOTE PAYABLE

Factoring Advances

Upon effectiveness of the Company’s acquisition of Empire on October 1, 2021, the Company became liable for merchant cash advances Empire had obtained in the amount of $4,975,940 with a carrying value of $4,072,799 as of the acquisition date. The advances had final payment dates ranging from November 19, 2020 to March 11, 2022. The advances were secured against the assets of Empire. The Company made payments of $4,104,334 towards these advances during the year ended December 31, 2021. There was amortization of debt discount of $903,141 from October 1, 2021 to December 8, 2021. The Company realized an aggregate gain on the settlement of these advances of $871,606 from November 30 to December 8, 2021.

On August 2, 2022, the Company entered into a revenue factoring advance in the principal amount of $1,587,500 for a purchase price of $1,225,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $37,798 through June 2023. The revenue factoring advance had a maturity date of June 4, 2023. There was amortization of debt discount of $362,500 and a gain on settlement of debt of $187,505, respectively, during the year ended December 31, 2022. The Company made repayments of $1,399,995 during the year ended December 31, 2022. As of December 31, 2022, the revenue factoring advance had a balance of $0 net an unamortized debt discount of $0.

On August 3, 2022, the Company entered into a revenue factoring advance in the principal amount of $952,500 for a purchase price of $735,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $22,679 through June 2023. The advance had a maturity of June 4, 2023. There was amortization of debt discount of $217,500 during the year ended December 31, 2022. The Company made repayments of $952,500 during the year ended December 31, 2022. As of December 31, 2022, the revenue factoring advance had a balance of $0 net an unamortized debt discount of $0.

On September 28, 2022, the Company entered into a revenue factoring advance in the principal amount of $1,815,000 for a purchase price of $1,477,500. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $36,012 through September 2023. The advance had a maturity of October 18, 2023. There was amortization of debt discount of $337,500 and a gain of settlement of debt of $165,000 during the year ended December 31, 2022. The Company made repayments of $1,650,000 during the year ended December 31, 2022. As of December 31, 2022, the revenue factoring advance had a balance of $0 net an unamortized debt discount of $0.

On December 8, 2022, the Company entered into a revenue factoring advance in the principal amount of $3,025,000 for a purchase price of $2,500,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $60,020 through December 2023. The advance matured on December 15, 2023. There was amortization of debt discount of $492,540 and $32,460 during the years ended December 31, 2023 and 2022, respectively. The Company made repayments of $180,060 during the year ended December 31, 2022. The Company made cash repayments of $695,198 and the remaining $2,149,742 balance was repaid out of the proceeds of another advance during the year ended December 31, 2023. As of December 31, 2023 and 2022, the revenue factoring advance had a balance of $0 and $2,352,000, net an unamortized debt discount of $0 and $492,540, respectively.

On December 8, 2022, the Company entered into a revenue factoring advance in the principal amount of $1,815,000 for a purchase price of $1,470,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $34,904 through December 2023. The advance matured on December 15, 2023. There was amortization of debt discount of $323,669 and $21,330 during the years ended December 31, 2023 and 2022, respectively. The Company made repayments of $104,712 during the year ended December 31, 2022. The Company made cash repayments of $408,136 and the remaining $1,302,152 balance was repaid out of the proceeds of another advance during the year ended December 31, 2023. As of December 31, 2023 and 2022, the revenue factoring advance had a balance of $0 and $1,386,619 net an unamortized debt discount of $0 and $323,670, respectively.

On December 29, 2022, the Company entered into a revenue factoring advance in the principal amount of $1,474,000 for a purchase price of $1,067,000. The Company’s Chief Executive Officer is personally liable for this factoring advance. The Company is required to make weekly payments in the amount $28,346 through January 2024. The advance matures on January 4, 2024. There was amortization of debt discount of $404,812 and $2,188 during the years ended December 31, 2023 and 2022, respectively. The Company made cash repayments of $1,474,000 and $0 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the revenue factoring advance had a balance of $0 and $1,069,188 net an unamortized debt discount of $0 and $404,812, respectively.

On January 17, 2023, the Company entered into a revenue factoring advance in the principal amount of $770,000 for a purchase price of $550,000. There was an origination fee of $50,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $24,062 through June 2023. The advance matured on June 17, 2023. There was amortization of debt discount of $270,000 during the year ended December 31, 2023. The Company made cash repayments of $192,500 and the remaining balance of $548,625 was repaid out of the proceeds of another advance during the year ended December 31, 2023. There was a $28,875 gain on settlement of the advance during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0.

On January 17, 2023, the Company entered into a revenue factoring advance in the principal amount of $1,400,000 for a purchase price of $1,000,000. There was an origination fee of $100,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $43,750 through June 2023. The advance matured on June 17, 2023. There was amortization of debt discount of $500,000 during the year ended December 31, 2023. The Company made cash repayments of $350,000 and the remaining balance of $1,003,870 was repaid out of the proceeds of another advance during the year ended December 31, 2023. There was a $46,130 gain on settlement of the advance during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0.

On March 29, 2023, the Company entered into a revenue factoring advance in the principal amount of $2,902,500 for a purchase price of $2,250,000. There was an origination fee of $67,500. The proceeds of $2,182,500 were used to pay off other advances and there were no cash proceeds. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $54,764 through April 2024. The advance matured on April 24, 2024. There was amortization of debt discount of $652,500 during the year ended December 31, 2023. The Company made cash repayments of $2,744,950 during the year ended December 30, 2023. There was a gain of settlement of $157,550 during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0.

On March 29, 2023, the Company entered into a revenue factoring advance in the principal amount of $4,386,000 for a purchase price of $3,400,000. There was an origination fee of $102,000. There were cash proceeds of $476,109 and the remaining proceeds of $2,821,891 were used to pay off other advances. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $82,755 through April 2024. The advance matured on April 24, 2024. There was amortization of debt discount of $986,000 during the year ended December 31, 2023, respectively. The Company made cash repayments of $4,080,105 during the year ended December 31, 2023. There was a gain of settlement of $305,895 during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0.

On May 26, 2023, the Company entered into a revenue factoring advance in the principal amount of $917,000 for a purchase price of $700,000. There was an origination fee of $21,000. There were cash proceeds of $679,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $17,635 through May 2024. The advance matured on May 26, 2024. There was amortization of debt discount of $238,000 during the year ended December 31, 2023. The Company made cash repayments of $861,000 during the year ended December 31, 2023. There was a gain of settlement of $56,000 during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0. net an unamortized debt discount of $0.

On May 26, 2023, the Company entered into a revenue factoring advance in the principal amount of $393,000 for a purchase price of $300,000. There was an origination fee of $9,000. There were cash proceeds of $291,000. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $7,558 through May 2024. The advance matures on May 26, 2024. There was amortization of debt discount of $102,000 during the year ended December 31, 2023. The Company made cash repayments of $375,000 during the year ended December 31, 2023. There was a gain of settlement of $18,000 during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0 net an unamortized debt discount of $0.

On June 7, 2023, the Company entered into a revenue factoring advance in the principal amount of $1,400,000 for a purchase price of $910,000. There was an origination fee of $90,000. There were cash proceeds of $910,000 during the nine months ended September 30, 2023. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $51,785 through March 2024. The advance matured on March 7, 2024. There was amortization of debt discount of $490,000 during the year ended December 31, 2023, respectively. The Company made cash repayments of $1,379,910 during the year ended December 31, 2023. There was a gain of settlement of $20,090 during the year ended December 31, 2023. As of December 31, 2023, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0.

The remaining advances are for Simple Agreements for Future Tokens, entered into with accredited investors issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof and/or Regulation D thereunder in 2018. As of December 31, 2023 and 2022, the Company owed $85,000 for Simple Agreements for Future Tokens.

Non-Convertible Notes Payable

On September 23, 2021, the Company entered into a Resolution Agreement with Sheppard, Mullin, Richter & Hampton concerning the $459,250.88 judgement entered against the Company (See Note 11 – Commitments and Contingencies). Under the terms of the Resolution Agreement, which the Company has classified as a non-convertible note, the Company was required to make a $25,000 initial payment by September 30, 2021 and is required to make $15,000 monthly payments from October 2021 to January 2023 with a final $10,000 payment due in February 2023. There was amortization of the debt discount of $3,182 and $10,297 during the years ended December 31, 2023 and 2022, respectively. During the years ended December 31, 2023 and 2022, the Company made $40,000 and $165,000 in payments towards the Resolution Agreement, respectively. As of December 31, 2023 and 2022, the Resolution Agreement had a balance of $0 and $38,284, net an unamortized debt discount of $0 and $3,182, respectively.

On April 11, 2022, the Company entered into a vehicle financing agreement with GM Financial for the purchase of a vehicle for use by the Company’s Chief Executive Officer in the principal amount of $74,186. GM Financial financed $65,000 of the purchase price of the vehicle and the Company was required to make a $10,000 down payment. There was a $2,400 rebate applied to the purchase price. The Company is required to make 60 monthly payments of $1,236. During the years ended December 31, 2023 and 2022, the Company made $27,393 and $6,182 in payments towards the financing agreement, respectively. There was amortization of debt discount of $1,592 and $1,296 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the financing agreement had a balance of $34,312 and $60,114, net an unamortized debt discount of $6,298 and $7,890, respectively.

On April 21, 2022, the Company entered into a secured promissory note in the principal amount of $964,470 for the financing and installation of a piece of equipment in the amount $750,000. The Company is required to make monthly payments in the amount $6,665 through October 2022 and monthly payments of $19,260 until October 2026. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on October 21, 2026. During the years ended December 31, 2023 and 2022, the Company made $354,789 and $46,655 in payments towards the note, respectively. There was amortization of debt discount of $72,932 and $34,440 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $455,929 and $732,550 net an unamortized debt discount of $107,097 and $180,030, respectively.

On September 1, 2022, the Company entered into a Deed of Trust note for the purchase of land and buildings. The note has a principal amount of $600,000, bears an interest rate of 6.5%, and matures on September 1, 2032. The Company is required to make monthly payments of $4,476 until September 1, 2032, when the remaining principal and accrued interest becomes due. The Company made principal payments of $16,727 and $4,046 during the years ended December 31, 2023 and 2022, respectively. The Company made interest payments of $36,985 and $9,382 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a principal balance of $579,227 and $595,954 and accrued interest of $2,991 and $3,184, respectively.

On September 1, 2022, the Company entered into an additional Deed of Trust note for the purchase of land and buildings. The note has a principal amount of $600,000, bears an interest rate of 6.5%, and matures on September 1, 2032. The Company is required to make monthly payments of $4,476 until September 1, 2032, when the remaining principal and accrued interest becomes due. The Company made principal payments of $16,727 and $4,046 during the years ended December 31, 2023 and 2022, respectively. The Company made interest payments of $36,985 and $9,382 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a principal balance of $579,227 and $595,954 and accrued interest of $2,991 and $3,184, respectively.

On September 14, 2022, the Company entered into a secured promissory note in the principal amount of $2,980,692 for a purchase price of $2,505,000. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount $82,797 through September 2025. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on September 14, 2025. There was amortization of debt discount of $256,797 and $47,411 during the years ended December 31, 2023 and 2022, respectively. There were payments of $1,374,821 and $165,594 towards the note during the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $1,268,792, and $2,386,817 net an unamortized debt discount of $171,484 and $428,281, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,539,630 for a purchase price of $1,078,502. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,410 through March 2023 and then monthly payments in the amount of $20,950 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $102,505 and $6,618 during the years ended December 31, 2023 and 2022, respectively. There were payments of $390,198 and $0 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $797,427 and $1,085,120 net an unamortized debt discount of $352,005 and $454,510, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,560,090 for a purchase price of $1,092,910. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,630 through March 2023 and then monthly payments in the amount of $21,225 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $103,312 and $6,867 during the years ended December 31, 2023 and 2022. respectively. There were payments of $396,977 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $805,949 and $1,099,614 net an unamortized debt discount of $357,164 and $460,476, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,597,860 for a purchase price of $1,119,334. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,860 through March 2023 and then monthly payments in the amount of $21,740 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $107,589 and $6,867 during the years ended December 31, 2023 and 2022, respectively. There were payments of $406,295 and $0 during the years ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $827,495 and $1,126,201 net an unamortized debt discount of $364,069 and $471,659, respectively.

On December 15, 2022, the Company entered into a secured promissory note in the principal amount of $1,557,435 for a purchase price of $1,093,380. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,585 through March 2023 and then monthly payments in the amount of $21,190 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 15, 2029. There was amortization of debt discount of $107,434 and $3,254 during the year ended December 31, 2023 and 2022, respectively. There were payments of $396,167 and $0 during the year ended December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the note had a balance of $807,900 and $1,096,634 net an unamortized debt discount of $353,367 and $460,801, respectively.

On January 10, 2023, the Company entered into a secured promissory note in the principal amount of $1,245,018 for a purchase price of $1,021,500. The note is secured by certain assets of the Company. There were cash proceeds of $1,000,000. The Company is required to make monthly payments in the amount of $10,365 through March 2023 and then monthly payments in the amount of $34,008 through March 2026. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 10, 2026. There was addition of debt discount of $223,518 and amortization of $80,564 during the year ended December 31, 2023. There were payments of $453,820 during the year ended December 31, 2023. As of December 31, 2023, the note had a balance of $648,244 net an unamortized debt discount of $142,954.

On January 12, 2023, the Company entered into a secured promissory note in the principal amount of $1,185,810 for a purchase price of $832,605. The note is secured by certain assets of the Company. There were non-cash proceeds of $832,605 used to purchase equipment. The Company is required to make monthly payments in the amount of $8,030 through April 2023 and then monthly payments in the amount of $16,135 through April 2028. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on April 12, 2028. There was amortization of debt discount of $75,253 during year ended December 31, 2023. There were payments of $286,983 during the year ended December 31, 2023. As of December 31, 2023, the note had a balance of $620,876 net an unamortized debt discount of $277,951.

On February 23, 2023, the Company entered into a secured promissory note in the principal amount of $822,040 for a purchase price of $628,353. The note is secured by certain assets of the Company. There were non-cash proceeds of $628,253 used to purchase equipment. The Company is required to make monthly payments in the amount of $6,370 through June 2023 and then monthly payments in the amount of $16,595 through June 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on June 23, 2027. There was amortization of debt discount of $182,908 during year ended December 31, 2023. There were payments of $297,020 during the year ended December 31, 2023. As of December 31, 2023, the note had a balance of $514,241 net an unamortized debt discount of $10,779.

On February 24, 2023, the Company entered into a secured promissory note in the principal amount of $1,186,580 for a purchase price of $832,605. The note is secured by certain assets of the Company. There were non-cash proceeds of $832,605 used to purchase equipment.The Company is required to make monthly payments in the amount of $9,185 through June 2023 and then monthly payments in the amount of $23,955 through June 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on June 24, 2027. There were additional fees incurred of $21,380 during the year ended December 31, 2023. There were payments of $224,859 during the year ended December 31, 2023. As of December 31, 2023, the note had a balance of $660,761 net an unamortized debt discount of $300,960.

On March 1, 2023, the Company entered into a secured promissory note in the principal amount of $635,000. The note is secured by certain assets of the Company. There were non-cash proceeds of $635,000 used to purchase equipment. The Company is required to make a payment in the amount of $63,500 on March 15, 2023 and then commencing on April 15, 2023, monthly payments in the amount of $14,138 through March 2027. The note bears an interest rate of 8.5%, is secured by certain assets of the Company, and matures on March 15, 2027. There were payments of $111,697 and $20,478 to principal and interest, respectively, during the year ended December 31, 2023. The Company assigned the remaining balance due under the note to DWM Properties, LLC, which is controlled by the Company’s Chief Executive Officer, in July 2023. As of December 31, 2023, the note had a balance of $0 and accrued interest of $0.

On April 12, 2023, the Company entered into a secured promissory note in the principal amount of $317,415 for a purchase price of $219,676. The note is secured by certain assets of the Company. There were non-cash proceeds of $219,676 used to purchase equipment.The Company is required to make monthly payments in the amount of $2,245 through August 2023 and then monthly payments in the amount of $4,315 through July 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on July 12, 2029. There were payments of $64,114 during the year ended December 31, 2023. There was amortization of debt discount of $28,101 during the year ended December 31, 2023, respectively. As of December 31, 2023, the note had a balance of $183,663 net an unamortized debt discount of $69,638.

On July 31, 2023, the Company entered into a secured promissory note with an entity controlled by the Company’s Chief Executive Officer in the principal amount of $17,218,350. The note was for the purchase of certain equipment from an entity controlled by the Company’s Chief Executive Officer and is secured by such equipment. There were non-cash proceeds of $17,218,350 used to purchase equipment. The note is junior to the senior secured debt entered into by the Company on the same date. The note matures on July 31, 2043 and accrues interest at 7% per annum. The note requires interest-only payments until the senior secured debt is fully satisfied. The Company made payments of $0 and $498,625 towards the principal and interest, respectively, during the year ended December 31, 2023. As of December 31, 2023, the note had a balance of $17,218,350.

The following table details the current and long-term principal due under non-convertible notes as of December 31, 2023.

	Principal (Current)			Principal (Long Term)
GM Financial (Issued April 11, 2022)	$	18,546		$	22,063
Non-Convertible Note (Issued March 8, 2019)		5,000			-
Deed of Trust Note (Issued September 1, 2022)		53,712			525,515
Deed of Trust Note (Issued September 1, 2022)		53,712			525,515
Equipment Finance Note (Issued April 21, 2022)		231,120			331,906
Equipment Finance Note (Issued September 14, 2022)		993,564			446,713
Equipment Finance Note (Issued November 28, 2022)		251,400			898,032
Equipment Finance Note (Issued November 28, 2022)		254,700			908,413
Equipment Finance Note (Issued November 28, 2022)		260,880			930,685
Equipment Finance Note (Issued December 15, 2022)		254,280			906,988
Equipment Finance Note (Issued January 10, 2023)		408,096			383,102
Equipment Finance Note (Issued January 12, 2023)		193,620			705,207
Equipment Finance Note (Issued February 23, 2023)		193,620			331,400
Equipment Finance Note (Issued February 24, 2023)		287,460			674,261
Equipment Finance Note (Issued April 12, 2023)		51,780			201,521
Related Party Promissory Note (Issued July 31, 2023)		-			17,218,350
Simple Agreements for Future Tokens (Issued February 2018)		-			85,000
Debt Discount		(774,308	)		(1,739,461	)
Total Principal of Non-Convertible Notes	$	2,737,182		$	23,355,210

Total principal payments due on non-convertible notes 2024 through 2028 and thereafter is as follows:

Year ended December 31,
2024	$	3,511,490
2025		3,258,100
2026		1,529,119
2027		809,342
2028		785,128
Thereafter		18,712,982