Debt

9 Months Ended

Mar. 31, 2024

Debt

Debt

Note 5 — Debt

During the year ended June 30, 2018, the Company entered two promissory notes with an investor of the Company in the amount of $350,000 with an interest rate of zero. This loan is considered payable upon demand. During the quarter ending March 31, 2024 the Company paid $71,000 and intends to make monthly payments of $25,000 until the note is paid in full.

During the year ended June 30, 2018, the Company issued a promissory note in favor of an investor of the Company in the amount of $150,000 in exchange for $132,000 cash. The loan maturity date was extended to August 8, 2019, the discount is fully amortized, total unpaid principal and interest is approximately $260,416, accruing at 12% at March 31, 2024, and is payable upon demand.

During the year ended June 30, 2019, the Company entered into a promissory note with an investor of the Company with a face value of $440,000 in exchange for $400,000 cash payment (“the Convertible Note”), the discount of the Convertible Note was amortized over the life of the Convertible Note and has an interest rate of 10%. As of March 31, 2024, the Convertible Note is payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, and the total unpaid principal and interest outstanding is approximately $246,834.

During the year ended June 30, 2019, the Company entered a promissory note with an investor of the Company with a face value of $220,000 in exchange for $200,000 cash payment the discount of the Notes was amortized over the life of the Note and has an interest rate of 10%. The promissory note is in default and payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, the total unpaid principal and interest is approximately $363,247.

During the year ended June 30, 2019, the Company entered into two promissory notes with an investor of the Company with a face value of $640,000 in exchange for a total of $600,000 cash payment. The discount of the Notes was amortized over the life of the Note and has an interest rate of 7%. The remaining principal is in default and payable upon demand and included as current debt on the balance sheet. As of March 31, 2024, the total unpaid principal and interest is approximately $408,980.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 10) with a face value of $600,000 in exchange for a total of $565,000 cash payments. The total discount of the Note will be amortized over the life of the Note and recorded as interest expense which matured on December 1, 2020. In January 2021, the Company repaid $300,000 and in July 2022 the Company repaid $100,000 of the promissory note balance. The note is in default and due upon demand and the interest rate was increased to 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $163,344. This is classified as current debt, related party on the balance sheet.

During the year ended June 30, 2020, the Company entered into a promissory note with a related party (see Note 10) with a face value of $50,000. In January 2021, the Company repaid $25,000 and in July 2022 repaid $8,333 of the promissory note balance. The note is in default and the interest rate increased to 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $13,985. This is classified as current debt, related party on the balance sheet.

During the quarter ended March 31, 2024, the Company entered into two promissory notes with related parties (see Note 10) with a total value of $65,000. The notes mature in 120 days and accrue interest at 12%. As of March 31, 2024, the total unpaid principal and interest is approximately $66,261. This is classified as current debt, related party on the balance sheet.

During the year ended June 30, 2020, the Company executed the standard loan documents required for securing a loan (the “EIDL Loan”) from the United States Small Business Administration (the “SBA”) under its Economic Injury Disaster Loan (“EIDL”) assistance program in light of the impact of the COVID-19 pandemic on the Company’s business. The principal amount of the EIDL Loan is $500,000, with proceeds to be used for working capital purposes. Interest on the EIDL Loan accrues at the rate of 3.75% per annum and installment payments, including principal and interest, are due monthly beginning twelve months from the date of the EIDL Loan in the amount of $2,437. The balance of principal and interest is payable thirty years from the date of the promissory note and included as long term debt on the balance sheet.

The Company recognized $92,785 and $130,544 of interest expense for the nine months ended March 31, 2024 and 2023, respectively. As of March 31, 2024 and June 2023, accrued interest on the above notes was $804,181 and $716,351, respectively. The weighted average interest rates as of March 31, 2024 and 2023 was 5.95% and 6.46%. 

Notes payable and long-term debt outstanding as of March 31, 2024 and June 30, 2023 are summarized below:

	Maturity Date	March 31, 2024		June 30, 2023
12% $150,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively	Due on Demand	$	150,000	$	150,000
10% $440,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively	Due on Demand		-		79,000
10% $220,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively	Due on Demand		220,000		220,000
7% $640,000 Convertible Note Payable, net of unamortized discount of $0 and $0, respectively	Due on Demand		244,802		244,802
12% $600,000 Related Party Note Payable, net of unamortized discount of $0 and $0 respectively	Due on Demand		100,000		100,000
12% $50,000 Related Party Note Payable	Due on Demand		7,817		7,817
12 % $65,000 Related Party Note Payable	May 2024		65,000		-
0% $350,000 Note Payable	Due on Demand		279,000		350,000
3.75% $500,000 SBA EIDL Note Payable	April 30, 2050		456,134		478,067
Total notes payable			1,522,753		1,629,686
Less current portion of notes payable			1,066,619		1,151,619
Notes payable, net of current portion		$	456,134	$	478,067