Quarterly report pursuant to Section 13 or 15(d)

SCHEDULE OF NOTES PAYABLE (Details)

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SCHEDULE OF NOTES PAYABLE (Details) - USD ($)
Sep. 30, 2021
Dec. 31, 2020
May 31, 2020
Apr. 30, 2020
Debt Disclosure [Abstract]        
(a) Notes payable secured by equipment [1] $ 212,875 $ 438,634    
(b) Note payable, secured by assets-in default [2] 13,350 33,350    
(c) Note payable, Payroll Protection Program [3] 134,125 134,125    
(d) Note payable, Economic Injury Disaster Loan [4] 160,000 160,000    
(e) Revenue sharing agreement [5] 242,800 242,800    
Total notes payable outstanding 763,150 1,008,909 $ 505,646 $ 505,646
Debt discount (53,667) (74,817)    
Notes payable, net of discount 709,483 934,092    
Less: Current portion 415,358 482,724    
Long term portion $ 294,125 $ 451,368    
[1] In April 2020 and May 2020, the Company entered into two financing agreements aggregating $505,646. The notes have a stated interest rate of 10.9%. The notes were issued at a discount including fees for underwriting, legal and administrative costs along with deferred financing costs. The deferred financing costs are being amortized over the terms of the notes. The notes are secured by the Company’s equipment, and require monthly payments of principal and interest of $21,000, and mature in April 2022 and May 2022. At December 31, 2020, the balance due on these notes was $438,634. During the nine months ended September 30, 2021, the Company made principal payments of $225,759 and at September 30, 2021, the balance due on these notes was $212,875. At September 30, 2021 and December 31, 2020, the unamortized discount related to deferred financing charges on these agreements was $53,667 and $74,817, respectively.
[2] Note payable, interest at 8.3% per annum, secured by all the assets of the Company. The note was due January 13, 2019. The note was due January 13, 2019. The note holder waived the default through December 31, 2020, and it is currently in default and the Company is in discussion with the note holder to extend the balance. During the nine months ended September 30, 2021, the Company made principal payments of $20,000 and at September 30, 2021, the balance due on this note was $13,350.
[3] On May 7, 2020, the Company was granted a loan (the “PPP loan”) from Bank of America in the aggregate amount of $134,125, pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The PPP loan agreement is dated May 4, 2020, matures on May 4, 2022, bears interest at a rate of 1% per annum, with the first six months of interest deferred, is payable monthly commencing on November 2020, and is unsecured and guaranteed by the U.S. Small Business Administration (“SBA”). The loan term may be extended to April 20, 2025, if mutually agreed to by the Company and lender. We applied ASC 470, Debt, to account for the PPP loan. Funds from the PPP loan may only be used for qualifying expenses as described in the CARES Act, including qualifying payroll costs, qualifying group health care benefits, qualifying rent and debt obligations, and qualifying utilities. The Company believes it used the entire loan amount for qualifying expenses. Under the terms of the PPP, certain amounts of the loan may be forgiven if they are used for qualifying expenses. The Company intends to apply for forgiveness of the PPP loan with respect to these qualifying expenses, however, we cannot assure that such forgiveness of any portion of the PPP loan will occur. The terms of the PPP loan provide for customary events of default including, among other things, payment defaults, breach of representations and warranties, and insolvency events. The Company was in compliance with the terms of the PPP loan and has submitted its application for forgiveness as of September 30, 2021.
[4] On September 5, 2020, the Company received a $160,000 loan (the “EID Loan”) from the SBA under the SBA’s Economic Injury Disaster Loan program. The EID Loan has a thirty-year term and bears interest at a rate of 3.75% per annum. Monthly principal and interest payments are deferred for twelve months, and commence in June 2021. The EID Loan may be prepaid at any time prior to maturity with no prepayment penalties. The proceeds from the EID Loan must be used for working capital. The Loan contains customary events of default and other provisions customary for a loan of this type. The Company was in compliance with the terms of the EID loan as of September 30, 2021.
[5] Between July 7, 2020, and July 29, 2020, the Company issued notes payable to third-party investors totaling $250,000, of which $7,200 was repaid in 2020. Under the terms of the notes, the Company is to pay 50% of the net revenues beginning on August 21, 2020, for a product to be designed and produced by the Company. The product has not been produced and therefore no payments have been made to date. The Company has received a notice of default and demand for payment from three note holders (owed approximately $146,000). The Company has retained counsel who is in discussion with the note holders.