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ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

6 Months Ended

Jun. 30, 2022

Advances And Non-convertible Notes Payable

ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

NOTE 6 – ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

During the six months ended June 30, 2022 and 2021, the Company received aggregate proceeds from non-interest bearing advances of $0 and $14,311 and repaid an aggregate of $0 and $1,210, respectively, of advances. Included in the six months ended June 30, 2022 and 2021 were $0 and $198 of advances from and $0 and $4,330 of repayments to the Company’s former Chief Executive Officer. The remaining advances are primarily for Simple Agreements for Future Tokens, entered into with accredited investors issued pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof and/or Regulation D thereunder in 2018. As of June 30, 2022 and December 31, 2021, the Company owed $97,000 and $97,000 in principal and $4,000 and $4,000 in accrued interest, respectively, on advances.

Non-Convertible Notes Payable

During the six months ended June 30, 2022 and 2021, the Company received proceeds from the issuance of non-convertible notes of $0 and $357,053, repaid aggregate principal of $100,000 and $0, and paid interest of $195,000, and $0, respectively, on non-convertible notes.

On September 23, 2021, the Company entered into a Resolution Agreement with Sheppard, Mullin, Richter & Hampton concerning the $459,250.88 judgement entered against the Company (See Note 9 – Commitments and Contingencies). Under the terms of the Resolution Agreement, which the Company has classified as a non-convertible note, the Company was required to make a $25,000 initial payment by September 30, 2021 and is required to make $15,000 monthly payments from October 2021 to January 2023 with a final $10,000 payment due in February 2023. The Company has made the October 2021 to July 2022 monthly payments. There was amortization of the debt discount of $2,746 during the three months ended June 30, 2022 and $5,149 during the six months ended June 30, 2022. During the six months ended June 30, 2022, the Company made $90,000 in payments towards the Resolution Agreement. As of June 30, 2022, the Resolution Agreement had a balance of $108,135, net an unamortized debt discount of $6,865.

On January 24, 2022, the Company settled a non-convertible note in the principal amount of $55,000 with accrued interest and penalties of $358,420 for a cash payment of $250,000. The Company realized a gain on settlement of debt of debt of $163,420. This was accounted for as a debt extinguishment.

On April 11, 2022, the Company entered into a vehicle financing agreement with GM Financial for the purchase of a vehicle for use by the Company’s Chief Executive Officer in the principal amount of $74,186. GM Financial financed $65,000 of the purchase price of the vehicle and the Company was required to make a $10,000 down payment. There was a $2,400 rebate applied to the purchase price. The Company is required to make 60 monthly payments of $1,236. During the six months ended June 30, 2022, the Company made $3,709 in payments towards the financing agreement. There was amortization of the debt discount of $393 during the three and six months ended June 30, 2022. As of June 30, 2022, the financing agreement had a balance of $61,684, net an unamortized debt discount of $8,794.

On April 21, 2022, the Company entered into a secured promissory note in the principal amount of $964,470 for the financing and installation of a piece of equipment in the amount $750,000. The Company is required to make monthly payments in the amount $6,665 through October 2022 and monthly payments of $19,260 until October 2026. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on October 21, 2026. During the six months ended June 30, 2022, the Company made $13,330 in payments towards the note. There was amortization of the debt discount of $9,132 during the three and six months ended June 30, 2022. As of June 30, 2022, the note had a balance of $745,802 net an unamortized debt discount of $205,338.

The following table details the current and long-term principal due under non-convertible notes as of June 30, 2022.

	Principal
Non-Convertible Note ($5,000 current)	$	5,000
Sheppard Mullin Resolution Agreement ($115,000 current)		115,000
GM Financial ($14,837 current)		70,478
Equipment financing loan ($18,740 current)		951,140
Debt Discount		(220,997	)
Total Principal of Non-Convertible Notes, net	$	920,621