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Notes Payable | 12 Months Ended
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Jun. 30, 2021
Debt Disclosure [Abstract] |
Notes Payable | Note 4 – Notes Payable Long Term Notes Payable The Company's long term notes payable obligations to unrelated parties are as follows at:
|  | 2021 |  | 2020
Note payable with a bank bearing interest at 4% and maturing on June 26, 2020. The note was renewed by the lender with a revised maturity of June 26, 2021 and a lowered interest rate to 3%. In July 2021, the note was renewed by the lender with a revised maturity date of July 7, 2026. The renewal provides for monthly interest payments and a balloon payment of outstanding principal and interest at maturity. The note is collateralized by a certificate of deposit owned by a related party. |  | $ | 237,039 |  | $ | 274,900
Long term PPP loan under the CARES Act bearing interest at 0.98% and maturing in April 2022. Monthly installments of principal and interest of $13,137 begin in October 2020. Payments on the loan are subject to application for SBA forgiveness submitted in 2021. The loan was recorded as other income during the year ended June 30, 2021. |  |  | - |  |  | 310,832
Note payable to an investor bearing interest of 10% and maturing on January 13, 2022 with monthly installments of principal and interest of $45,294 beginning in June 2021. |  |  | 348,456 |  |  | -
Long term loan under Section 7(b) of the Economic Injury Disaster Loan program bearing interest at 3.75% and maturing in May 2050. Monthly installments of principal and interest of $731 begin in July 2021. |  |  | 150,000 |  |  | 150,000
Financing lease liabilities for offices and warehouses with monthly installments of $24,091 (ranging from $245 to $9,664) over terms, expiring through December 2024. |  |  | 208,051 |  |  | 223,982
F-17
Financing leases with a related party for delivery vehicles with monthly installments totaling $813, including interest, over five-year terms expiring through July 2020. |  | $ | - |  | $ | 1,245
Note payable with a finance company for delivery vehicle with monthly installments totaling $679 including interest at 8.99% over a 6-year term expiring in December 2025. |  |  | 31,016 |  |  | 34,019
Total Notes Payable |  |  | 974,562 |  |  | 994,978
Less: Unamortized original issue discounts |  |  | 17,500 |  |  | -
Current Portion of Notes Payable |  |  | 552,055 |  |  | 512,425
Long-term Portion of Notes Payable |  | $ | 405,007 |  | $ | 482,553
The original issue discount is being amortized over the terms of the convertible notes using the effective interest method. The Company submitted its application for forgiveness of the PPP loan. The application was supported by documentation of qualified expenses and compliance of eligibility with the program. The Company has not been notified by the SBA that the PPP loan was forgiven; however management expects the loan to be forgiven by the SBA and recorded the forgiveness as other income in the consolidated statement of operations for the year ended June 30, 2021. Future minimum principal payments on the non-related party long term notes payable are as follows:
Year ending June 30, |  |  |
2022 |  | $ | 552,055
2023 |  |  | 107,565
2024 |  |  | 61,831
2025 |  |  | 62,606
2026 |  |  | 60,286
Thereafter |  |  | 130,219
|  | $ | 974,562
Convertible Notes Payable
|  |  | 2021 |  |  | 2020
On March 28, 2019, the Company signed a convertible promissory note with an investor. The $225,000 note was issued at a discount of $20,000 and bore interest at 10% per year. The Company issued 25,000 common shares to the investor. Three draws of $56,250, $112,500, and $56,250 were borrowed under this note. The note principal and interest were convertible into shares of common stock at the lower of (a) 70% of the lowest traded price of the common stock during the 20 trading days immediately preceding the notice of conversion or (b) $3 per share, beginning in September 2019. The note had prepayment penalties ranging from 110% to 125% of the principal and interest outstanding if repaid within 60 to 180 days from issuance. The note matured in three intervals in March 2020, June 2020, and November 2020. The note was repaid by conversion to stock. |  | $ | - |  | $ | 24,150
On November 18, 2019, the Company signed a convertible promissory note with an investor. The $110,000 note was issued at a discount of $10,000 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) 70% of the lowest traded price of common stock during the 15 trading days prior to the issue date or (b) 70% of the lowest traded price for the common stock during the 15 trading days prior to conversion of the note. The note matured in November 2020. The note had prepayment penalties between 115% and 125% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock. |  |  | - |  |  | 1,000
F-18
On December 11, 2019, the Company signed a convertible promissory note with an investor. The $220,430 note was issued at a discount of $15,430 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.46 per share or (b) 75% of the lowest trading price of common stock during the 10 trading days prior to conversion beginning in June 2020. The note matured in December 2020. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock. |  | $ | - |  | $ | 121,000
On November 25, 2019, the Company signed a convertible promissory note with an investor. The $1,000,000 note was issued at a discount of $70,000 and bore interest at 8% per year. The note principal and interest up to $250,000 every 30-day calendar period were convertible into shares of common stock at the lower of (a) 75% of the lowest traded price of the common stock during the 10 trading days immediately preceding the notice of conversion or (b) $0.46 per share. The note matured in November 2020. The note had a redemption premium of 115% of the principal and interest outstanding if repaid before maturity. The note was repaid by conversion to stock. |  |  | - |  |  | 825,000
On January 9, 2020, the Company entered into a $225,000 convertible note. The $225,000 note was issued at a discount of $13,500 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) 75% of the lowest traded price of the common stock during the 10 trading days immediately preceding the notice of conversion or (b) the lowest traded price of the common stock during the 10 trading days prior to the issuance of this note. The note matured in October 2020. The note had prepayment penalties of 110% to 125% of the principal and interest outstanding if repaid before 180 days from issuance. The note's principal was increased from $225,000 to $250,000 due to a clause in the agreement related to minimum stock price. The note was repaid by conversion to stock. |  |  | - |  |  | 250,000
On March 25, 2020 the Company signed a convertible promissory note with an investor. The $338,625 note was issued at a discount of $23,625 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.46 per share or (b) 75% of the lowest trading price of common stock during the 10 trading days prior to conversion. The note matured in March 2021. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock. |  |  | - |  |  | 338,625
On June 26, 2020, the Company signed a convertible promissory note with an investor. The $430,000 note was issued at a discount of $30,000 and bore interest at 8% per year. The note principal and interest were convertible into shares of common stock at the lower of (a) $0.47 per share or (b) 70% of the lowest trading price of common stock during the 10 trading days prior to conversion. The note matures in June 2021. The note had prepayment penalties between 120% and 130% of the principal and interest outstanding if repaid before 180 days from issuance. The note was repaid by conversion to stock. |  |  | - |  |  | 430,000
Total Convertible Notes Payable |  |  | - |  |  | 1,989,975
Less: Unamortized original issue discounts |  |  | - |  |  | 888,075
Current Portion of Convertible Notes Payable |  |  | - |  |  | 1,101,900
Long-term Portion of Convertible Notes Payable |  | $ | - |  | $ | -
The original issue discount is being amortized over the terms of the convertible notes using the effective interest method. During the years ended June 30, 2021 and 2020, the Company amortized $274,703 and $340,526 of debt discounts to interest expense and $382,436 and $1,825,506 to interest accretion. The Company incurred noncash interest prepayment penalties of approximately $111,000 and $139,000 during the years ended June 30, 2021 and 2020, respectively, due to advance repayments of certain of these convertible notes. Convertible notes are subordinate to the bank debt of the Company. F-19 Accrued but unpaid interest on the notes is convertible by the lender into, and payable by the Company in common shares at a price per common share equal to the most recent closing price of the Company's common shares prior to the delivery to the Company of a notice of conversion, or the due date of interest, as applicable. Interest, when due, is payable either in cash or common shares. The conversion features meet the definition of a derivative liability instrument because the conversion rate is variable and therefore does not meet the "fixed-for-fixed" criteria outlined in ASC 815-40-15. As a result, the conversion features of the notes are recorded as a derivative liability at fair value and marked-to-market each period with the changes in fair value each period charged or credited to other income (expense). Warrants The Company issued common stock and warrants as consideration for the convertible notes. The warrants contain certain anti-dilutive clauses that are accounted for as financial derivatives. See Note 8 for common stock issued. Unexercised warrants of 204,771,864 after anti-dilution protection adjustment, were outstanding at June 30, 2020. All outstanding warrants have an original exercise prices of $4 per share, contain anti-dilution protection clauses, and expire 36 months from issue date. The anti-dilution clause was triggered for outstanding warrants, which now have an exercise price below $4 per share. As of June 30, 2020, outstanding warrants expire between November 29, 2021 and November 18, 2022. There are no unexercised warrants outstanding at June 30, 2021. The warrants meet the definition of a derivative liability instrument because the exercise price is variable and therefore does not meet the "fixed-for-fixed" criteria outlined in ASC 815-40-15. As a result, the value of unexercised warrants is recorded as a derivative liability at fair value and marked-to-market each period with the changes in fair value each period charged or credited to other income (expense).

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- Definition The entire disclosure for long-term debt. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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