Note 7 - Notes Payable

12 Months Ended

Dec. 31, 2020

Notes to Financial Statements

Short-term Debt [Text Block]

NOTE

7–

NOTES PAYABLE

On

March 30, 2019,

the Company executed a promissory note for

$50,000

to ZQH (

75%

) and Pure (

25%

). The due date of the note is

April 30, 2019

and has an interest rate of

$50

per day. The note is for an escrow payment made directly to Premier Gas Company, LLC to hold the Purchase and Sale Agreement dated

January 29, 2019.

The note is secured by

50,000

shares of the Company's common stock at

$1

per share. On

June 25, 2020,

the Company entered into a Purchase and Sale Agreement with Pure. and ZQH to acquire oil and gas assets in Oklahoma in consideration of a purchase price of

$1,000,000.

(See Note

3

). In connection with the purchase, the

$50,000

note and accrued interest of

$10,000

was added to the purchase price resulting in a total note payable balance of

$1,060,000.

During the year ended

December 31, 2020,

$10,750

of accrued interest which was previously outstanding was discharged and recorded as a gain on extinguishment of debt. The note payable of

$1,060,000

was due to be paid on or before

July 31, 2020

but remains outstanding to date. The balance of the note will increase by

$50,000

per month thereafter up to a maximum amount of

$200,000

through

December 1, 2020.

As of

December 31, 2020,

the Company recognized

$200,000

of default interest that was added to the principal for a total payable of

$1,160,000.

If the purchase price is

not

fully paid on or before

December 1, 2020,

ZQH and Pure have the option to convert the balance outstanding into the Company's common stock at a conversion price of

$1.00

per share and the note will also be subject to a monthly interest of

10%.

As of

December 31, 2020,

the note is outstanding with accrued interest of

$0

. The Company, Pure, and ZQH have entered into various Extension Agreements, the current

one

of which is dated

March 28

th

,

2021

(the “Extension Agreement”). The Extension Agreement prevents Pure and ZQH from taking stock rather than cash through

June 1, 2021,

in return for which the Company makes a monthly interest payment to ZQH and Pure of

ten thousand eighty-three

 dollars (

$10,083

), which represents a

10%

annual interest on the Purchase Price, compounded monthly. The Extension Agreement allows the Company to extend that period beyond

June 1, 2021

under similar terms.