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DEBT
 9 Months Ended
Jun. 30, 2023
DEBT  
DEBT

NOTE 7 – DEBT

Short and Long-Term Debt

Short-term debt is generally defined as debt with principal maturities of one-year or less. Long-term debt is defined as principal maturities of one year or more.

The following is a summary of our indebtedness at June 30, 2023:

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​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Carrying Value

​

​

​

​

​

​

​

​

​

​

​

Unpaid Principal 

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​

​

​

​

​

​

Contractual

Contractual 

Type of Debt

    

Balance

    

Current

    

Long-Term

    

 Interest Rate

Maturity

Matured notes

​

$

2,398,881

​

$

2,398,881

​

$

-

 

0.00 - 10.00%

2019 - 2021

Promissory notes

​

 

-

​

 

-

​

 

-

 

NA

NA

Real Estate notes

​

 

5,000,000

​

 

5,000,000

​

 

-

 

8.99%

2023 - 2024

Loans and advances

​

 

332,800

​

 

332,800

​

 

-

 

0.00 - 10.00%

2016 - 2018

Less: debt discount

​

 

(425,574)

​

 

(425,574)

​

 

-

 

NA

NA

Total Debt

​

$

7,306,107

​

$

7,306,107

​

$

—

 

​

​

​

The following is a summary of our indebtedness at September 30, 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net Carrying Value

​

​

​

​

​

​

​

​

​

​

​

Unpaid Principal 

​

​

​

​

​

​

​

Contractual

Contractual 

Type of Debt

    

Balance

    

Current

    

Long-Term

    

 Interest Rate

Maturity

Matured notes

​

$

3,051,085

​

$

3,051,085

​

$

—

 

0.00 - 10.00%

2019 - 2021

Promissory notes

​

 

1,096,787

​

 

—

​

 

1,096,787

 

28.00%

2024

Real Estate note

​

 

5,247,612

​

 

247,612

​

 

5,000,000

 

5.0 - 8.99%

2023 - 2024

Loan advances

​

 

557,800

​

 

557,800

​

 

—

 

0.00 - 10.00%

2016 – 2018

Less: debt discount

​

 

(932,235)

​

 

—

​

 

(932,235)

 

NA

NA

Total Debt

​

$

9,021,049

​

$

3,856,497

​

$

5,164,552

 

​

​

​

Scheduled Debt Maturities

The following table represents scheduled debt maturities at June 30, 2023:

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​

​

​

​

​

​

​

​

​

​

 

Years Ended June 30, 

​

    

2023 (3 months)

    

2024

    

Total

Total Debt

​

$

2,717,804

​

$

4,588,303

​

$

7,306,107

​

Notes and Advances

In some instances, we issued convertible instruments with detachable warrants, resulting in the recognition of a debt discount, which is amortized to interest expense over the term of the relevant instrument. Debt discount amortization for the three and nine months ended June 30, 2023 and 2022, was $148,674 and $150,442,091, and $183,558 and $19,584,041, respectively. Debt discount on convertible notes with detachable warrants in amount of $150,000,000 (see below) was presented in the statement of operations as "Other financing costs - initial recognition of derivative liabilities" and in the cash flow statement – in the line item “Initial recognition of derivative liabilities”.

The Company issued shares of common stock to certain creditors for the conversion of convertible notes, satisfaction of debt payments, and in settlement of indebtedness. For the nine months ended June 30, 2023, the carrying amount of indebtedness that was settled via issuance of shares of our common stock was $153,222,237 (this relates to convertible notes issued in lieu of preferred stock and relevant interest, see below). The carrying amount of indebtedness that was settled via issuance of common stock for the nine months ended June 30, 2022 was $23,192,500.

NuBridge Commercial Lending LLC Promissory Note

On March 7, 2022, the Company’s wholly owned subsidiary, Mullen Investment Properties, LLC entered into a Promissory Note (the “Promissory Note”) with NuBridge Commercial Lending LLC for a principal amount of $5 million. The Promissory Note bears interest at a fixed rate of 8.99% per annum and the principal amount is due March 1, 2024. Collateral for the loan includes the title to the Company’s property at 1 Greentech Drive, Tunica, MS. Under the Promissory Note, prepaid interest and issuance costs of $1,157,209 were withheld from the principal and recorded as debt discount, which is being amortized over the term of the note. As of June 30, 2023, the remaining unamortized debt discount was $425,574.

Drawbridge and Amended A&R Note with Esousa

On October 14, 2022, the Company entered into an Amended and Restated Secured Convertible Note and Security Agreement (the “A&R Note”) with Esousa Holdings LLC (“Esousa”), including principal of $1,032,217 (net of debt discount of $64,570) and accrued interest of $316,127 along with the liability to issue 46,667 shares of common stock (having a then carrying value of $10,710,000) and an obligation to compensate for the losses from market value decline of shares were exchanged for a new convertible note payable with a face value of $12,945,914 and 102,222 shares of common stock (having a fair value of $5,524,600), resulting in a loss on extinguishment of $6,452,170. On November 1, 2022, the A&R Note payable to Esousa, inclusive of any accrued interest, was converted into 275,769 shares of common stock. 

Convertible Notes

On November 14, 2022, the Company entered into Amendment No. 3 (“Amendment No. 3”) to the June 7, 2022, Securities Purchase Agreement (as amended, the “Series D SPA”). The investors paid $150 million and in lieu of receiving shares of Series D Preferred Stock and Warrants, the investors received notes convertible into shares of the Company’s common stock (“Notes”) and Warrants.

Amendment No. 3 further provided that the remaining $90 million of the commitment amount will be paid in the first half of 2023 in two tranches. The purchase price per share of Series D Preferred Stock will be the lower of (i) $1.27 (to be adjusted to stock splits), the closing price of the Company’s stock on the date the Securities Purchase Agreement was executed, or (ii) the closing price of the common stock on the trading day immediately preceding the respective purchase date, subject to a floor price of $0.10 per share. For no additional consideration, for every share of Series D Preferred Stock purchased, investors will receive warrants to purchase shares of common stock equal to 185% of the number of shares of Series D Preferred Stock purchased by the investors at an exercise price equal to the purchase price for shares of Series D Preferred Stock (the warrants also permit cashless exercise). The Company exercised its right and received these investments in April and June 2023, see Note 8.  

On November 15, 2022, the Company issued the unsecured convertible Notes aggregating $150,000,000 in lieu of Series D Preferred Stock. The Notes bear interest at 15% and are convertible into shares of common stock either: (A) at the option of the noteholder at the lower of: (i) $0.303 (to be adjusted to stock splits); or (ii) the closing price of our common stock on January 3, 2023; or (B) mandatorily on November 21, 2022 at the lower of: (i) $0.303 (to be adjusted to stock splits); or (ii) the closing price of our common stock on November 18, 2022, provided adequate unissued authorized shares were available.  For each share issued upon conversion, the holders are entitled to 1.85 times as many five-year warrants with an exercise price equal to the conversion price for the Notes.  

As a result, and since the Company had an insufficient number of authorized shares available to settle potential future warrant exercises, the Company recognized a derivative liability of $244,510,164 for the warrants with a corresponding increase in debt discount of $150,000,000 and interest expense of $94,510,164 (presented combined in the Statement of operations as "Other financing costs - initial recognition of derivative liabilities").  The debt discount was amortized over the term of the note through the date the convertible notes were mandatorily convertible.  Accordingly, the entire amount was expensed during the nine-month period ended June 30, 2023. On November 21, 2022, principal of $59,402,877 was mandatorily converted into 981,460 shares of common stock.

On December 23, 2022, the Company defaulted on the Notes by not having sufficient authorized shares to allow for both the Notes to be fully converted and the warrants to be exercised. On January 13, 2023, the Company entered into a Settlement Agreement and Release in which investors waived the default prior to February 1, 2023. In exchange, the Company granted the investors the right to purchase additional shares of Series D Preferred Stock and warrants in an amount equal to such investor’s pro rata portion of $10 million. This right expired on June 30, 2023.

During February 2023, the remaining balance of the Notes (with the principal of $90,362,418) and accrued interests (in amount of $3,456,941) were converted by the holders into 1,376,155 shares of common stock. See Note 8 with regards to warrants issued upon conversion of these Notes.

As of June 30, 2023, and September 30, 2022, accrued interest on outstanding notes payable was $1,479,688 and $1,374,925, respectively (relates mainly to NuBridge Commercial Lending LLC Promissory Note, see above).