NOTES PAYABLE

6 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

NOTES PAYABLE

NOTE 4 – NOTES PAYABLE

	September 30, 2023  (unaudited)			March 31, 2023
Note Payable Agreement 2	$	10,408,213		$	14,772,293
Note Payable Agreement 3		4,201,954			6,024,941
Note Payable Agreement 4		4,885,385			—
Note Payable Agreement 5		3,055,271			—
Total notes payable		22,550,823			20,797,234
Unamortized debt discount		(1,639,166	)		(767,083	)
Notes payable, net of note discounts		20,911,657			20,030,151
Current portion		(17,551,356	)		(16,942,500	)
Non-current portion	$	3,360,301		$	3,087,651

NOTE PAYABLE AGREEMENT 2

On February 8, 2021, the Company issued a note payable (“Note Payable Agreements 2”, “Note 2”) to a third-party investor.  The note was for $24,015,000, originally matured on February 9, 2023, and is secured by all the assets of the Company. The Company agreed to make principal payments beginning in August 2021 of $400,000 monthly, which increased in February 2022 to $2,000,000 monthly. In addition, the Company is required to accrue a monthly PIK fee equal to 0.833% of the outstanding balance, which is in substance interest at an annual rate of approximately 10%, that is added to the note principal each month.

In May 2022, Note 2 was amended to reduce principal payments from $2,000,000 a month to $500,000 a month. In October 2022 Note 2 was again amended to extend the maturity from February 9, 2023 to July 1, 2024, and to increase principal payments to $1,000,000 per month beginning in March 2023. In consideration, the Company agreed to pay aggregate fees of $2,304,539 to the investor which were added to the principal balance of Note 2.

NOTE PAYABLE AGREEMENT 3 

On May 20, 2022, the Company issued a note payable (“Note Payable Agreement 3”) with a third-party investor. The note was for $6,015,000, matures on May 20, 2024, and is secured by all the assets of the Company. The Company received cash proceeds of $4,700,000, resulting in a discount of $1,315,000 made up of an original issue discount (“OID”) of $1,000,000, commission of $300,000 that was paid from proceeds, and $15,000 to cover transaction expenses. In addition, the Company is required to accrue a monthly PIK fee equal to 0.833% of the outstanding balance, which is in substance interest at an annual rate of approximately 10%, that is added to the note principal each month. The debt less discount and transaction expenses will be accreted over the term of the note using the effective interest rate method. 

During the six-month period ended September 30, 2023, debt discount amortization of $328,750 was recorded. At September 30, 2023, the unamortized debt discount was $438,333.

NOTE PAYABLE AGREEMENTS 4 and 5

In August 2023, the Company issued 2 new notes payable (“Note Payable Agreements 4 & 5”) with third-party investors. The notes were for $7,810,000, mature on August 8, 2025, and are secured by all the assets of the Company. The Company received cash proceeds of $6,500,000, resulting in a discount of $1,310,000 made up of an original issue discount (“OID”) of $1,000,000, commission of $300,000 that was paid from proceeds, and $10,000 to cover transaction expenses. In addition, the Company is required to accrue a monthly PIK fee equal to 0.833% of the outstanding balance, which is in substance interest at an annual rate of approximately 10%, that is added to the note principal each month. The debt less discount and transaction expenses will be accreted over the term of the note using the effective interest rate method. 

During the six-month period ended September 30, 2023, debt discount amortization of $109,166 was recorded. At September 30, 2023, the unamortized debt discount was $1,200,834.

As part of the note payable agreements, $3,000,000 of total proceeds received from these issuances was placed in escrow and will be used as part of the installment payments to the outstanding balances of notes payable 2 and 3 issued in February 2021 and May 2022, respectively.