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Long-term Debt

12 Months Ended

Dec. 31, 2024

Note 16. Long-term Debt

To assist in funding the manufacture of the Company’s Remediation Processing Centers, between 2015 and 2017, the Company entered into two agreements which include terms for the purchase of participation rights for the sale of future revenue of the funded RPCs, and which also require working interest budget payments by the Company.

The Company accounted for the terms under these contracts for the sale of future revenue under Accounting Standards Codification 470 (“ASC 470”). Accordingly, these contracts included the receipt of cash from an investor where the Company agrees to pay the investor for a defined period a specified percentage or amount of the revenue or a measure of income (for example, gross revenue) according to their contractual right, in which the Company would record the cash as debt and apply the effective interest method to calculate and accrue interest on the contracts. The terms of these agreements grant the holder a prorated 25% participation in the gross revenue of the assets as defined in the agreements for 20 years after operations commence for a purchase price of approximately $2,200,000. The Company made its first payment of $7,735 in the second quarter of 2021. Due to delays and limitations in achieving scaled up operations (see Note 3 Long Lived Assets) the effective interest rate of these agreements range from approximately 11% to 31% for the year ended December 31, 2023. During 2023, the Company entered into an agreement to move our Vernal RPC to Kuwait to commence scaled up remediation services, as the Vernal plant was not producing product toward its off-take agreement, which further delayed our anticipated operations. Furthermore, in the fourth quarter of 2023, Enshaat Al Sayer (Enshaat) (the original contractor chosen for the remediation of certain cleanup for the Kuwait Environmental Remediation Project (KERP) notified us that it terminated its subcontract with DIC, which effectively terminated DIC’s contract with the Company. For the year ended December 31, 2024, the Company continues to negotiate the terms for an agreement directly with Kuwait Oil Company for the remediation services on the KERP. The Company evaluated these events and determined that the inability to obtain an agreement with Enshaat or Kuwait Oil Company in 2024 was a trigger event requiring analysis for impairment. We analyzed the events and assessed an impairment loss of the assets related to our Kuwait RPCs of $7,047,179 for the year ended December 31, 2024. Additionally, the Company assessed the impact of the impairment loss, including the impact on our ancillary agreements. Additionally, the Company assessed the impact of the impairment loss, including the impact on our ancillary agreements. Ancillary to our prospective Kuwait RPC operations, the royalty and working interest agreements related to these RPCs provide for clauses that stipulate if the RPCs never enter into operations that the Company is not liable for any payment. As a result of such impairments, it has become probable that the Kuwait RPCs may not enter into operations, and such debt was reversed and the debt discounts fully expensed as of December 31, 2024.

Some holders of these participation rights also have the option to relinquish ownership and all remaining benefits of their LLC units in exchange for Common Stock in the Company. Depending on the contract, these options to convert to common stock range from between 1 and 5.5 years. The exercise period ranges from between 1 year to 5.5 years with a step-up discount to market for each year the option is not exercised with a range of between 5% to 25% discount to market. As of December 31, 2024 and 2023 none of these options have been exercised to convert to Common Stock. Accordingly, under Accounting Standards Codification 815 (“ASC 815”) the Company valued these options at fair value, which found the fair value of the options to be nominal. Long-term debt related to these participation rights is recorded in “Long-term debt” on the consolidated balance sheet.

The accounting for the terms under these contracts that call for working interest budget payments by the Company are recorded in current liabilities on the consolidated balance sheet and paid down through pass-through expenses or cash according to the contract. Accordingly, the Company records any unpaid balance of budget payments received in “Long-term debt, current” as these liabilities are generally paid within 12 months after proceeds are received.

Long-term debt consists of the following:

Schedule of long-term debt
	December 31,		December 31,
	2024		2023
Principal	$	-	$	2,196,233
Accrued interest		-		2,434,449
Debt discount		-		(197,052	)
Total long term debt	$	-	$	4,433,630

Long term debt, current	$	-	$	-
Long term debt	$	-	$	4,433,630