Loans Payable

3 Months Ended

Jan. 31, 2024

Debt Disclosure [Abstract]

Loans Payable

Note 5 – Loans Payable   

On May 9, 2023, the Company entered into two loan agreements which are collateralized by all assets of the Company until the loans are repaid in full. As illustrated in the following table, under the terms of these agreements, the Company received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the lenders at the disclosed weekly payment rate. The Company’s former Chief Executive Officer, Eric Mosser personally guarantees the performance of these loans. These loans were fully paid on December 4, 2023, upon their maturity.

On November 29, 2023, the Company entered into two loan agreements which are collateralized by all assets of the Company until the loans are repaid in full. As illustrated in the following table, under the terms of these agreements, the Company received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the lenders at the disclosed weekly payment rate. The Company’s former Chief Executive Officer, Eric Mosser personally guarantees the performance of these loans.   

The Company has accounted for these agreements as loans under ASC 860 because while we provided rights to current and future receipts, we still had control over the receipts. The difference between the Purchase Amount and the Purchase Price is imputed interest that is recorded as interest expense when paid.

The following table shows our loan agreements as of January 31, 2024

Inception Date	Purchase Price		Purchased Amount		Outstanding Balance		Payment frequency	Payment Rate		Deferred Finance Fees
November 29, 2023	$	600,000	$	864,000	$	402,832	Weekly		30,857	$	25,739
November 29, 2023		600,000		864,000		381,057	Weekly		30,857		26,086
	$	1,200,000	$	1,728,000	$	783,889				$	51,825

The following table shows our loan agreements as of October 31, 2023:

Inception Date	Purchase Price		Purchased Amount		Outstanding Balance		Payment frequency	Payment Rate		Deferred Finance Fees
May 9, 2023	$	400,000	$	580,000	$	53,709	Weekly		20,714	$	3,434
May 9, 2023		400,000		580,000		80,467	Weekly		20,714		5,247
	$	800,000	$	1,160,000	$	134,176				$	8,681

On August 9, 2023, the Company entered into a Securities Purchase Agreement (the “SPA”) with AJB Capital Investments, LLC (“AJB”), pursuant to which the Company sold a Promissory Note in the principal amount of $650,000 (the “Note”) to AJB in a private transaction for a purchase price of $585,000 (giving effect to original issue discount of $65,000). The Note matures on February 8, 2024 (the “Maturity Date”) and bears interest at the rate of 10% per annum. Interest shall be payable on a monthly basis beginning on the date that is one month following the date of issuance of the Note. Provided no event of default (as defined in the Note) is in effect as of the Maturity Date, the Company may elect to extend the Maturity Date for a period of six (6) months. Pursuant to the terms of the SPA, the Company paid a commitment fee to AJB in the form of 19,048 shares of Common Stock (the “Commitment Fee Shares”) with a relative fair value of $130,478 which was recognized as discount to the note. The debt discount and issuance costs are amortized over the term of the note. Amortization expense amounted to $38,273 for the three months ended January 31, 2024, and $122,273 for the year ended October 31, 2023. As of January 31, 2024, and October 31, 2023, the carrying value of the loan and unamortized debt discount and issuance costs were $nil and $513,295 and $nil and $136,705, respectively.

Under the SPA, the Company has the right to repurchase half of the Commitment Fee Shares if the Note is repaid in full prior to maturity. On December 1, 2023, the Company fully paid the loan balance in advance of the maturity date. In connections with the repayment of the Note, the Company agreed that AJB would be permitted to retain all of the Commitment Fee Shares. The Company recognized $98,432 as loss on extinguishment of debt for the three months ended January 31, 2024.  

On May 20, 2023, the Company obtained a nine-month loan from Westfield Bank to finance the annual D&O insurance. The principal amount was $342,001 and subject to an effective interest rate of 7.79%. As of January 31, 2024 and October 31, 2023, the remaining balance was $38,000 and $152,000, respectively.