Notes Payable

6 Months Ended

Jun. 30, 2024

Notes Payable [Abstract]

NOTES PAYABLE

NOTE 5.   NOTES PAYABLE

Our notes payable consisted of the following:

	June 30, 2024									December 31, 2023
	Third-party			Related-party			Total			Third-party			Related-party			Total
2022 12% Notes	$	13,167,796			332,204			13,500,000		$	13,167,796		$	332,204		$	13,500,000
Trees Transaction Notes		—			—			—			—			326,811			326,811
Green Tree Acquisition Notes		—			468,333			468,333			—			562,000			562,000
Green Man Acquisition Notes		1,270,000			—			1,270,000			1,555,000			—			1,555,000
Working Capital Notes		1,000,000			—			1,000,000			500,000			—			500,000
Unamortized debt discount		(1,023,010	)		(19,923	)		(1,042,933	)		(1,312,427	)		(25,141	)		(1,337,568	)
Total debt		14,414,786			780,614			15,195,400			13,910,369			1,195,874			15,106,243
Less: Current portion		(96,363	)		(61,400	)		(157,763	)		(605,000	)		(487,382	)		(1,092,382	)
Long-term portion	$	14,318,423		$	719,214		$	15,037,637		$	13,305,369		$	708,492		$	14,013,861

Trees Transaction Notes

In January 2022, with the completion of the Trees MLK acquisition, we are obligated to pay the Seller cash equal to $384,873 in equal monthly installments over a period of 24 months. As of June 30, 2024 and 2023, the debt balance of this note was nil and $224,509, respectively. During the year, the Trees MLK Seller forgave the remaining principal balance $264,639 owed from the Trees MLK acquisition. As the debt holder is also a shareholder of the Company, the effect of this debt forgiveness was accounted for as a capital contribution in paid-in capital.

Green Man Acquisition Notes

In December 2022, with the completion of the Green Man Acquisition, we are obligated to pay the Seller cash equal to $1,500,000 in equal monthly installments over a period of 18 months. The payments begin in December 2023 and the payment is equal to $83,333 per month. The relative fair value of this obligation resulted in a debt discount of $275,154. We recorded amortization of debt discount expense from this obligation of $36,656 and $38,379 for the three months ended June 30, 2024 and 2023, respectively, and $67,802 and $75,629 for the six months ended June 30, 2024 and 2023, respectively.

12% Notes – 2023 Modification

On December 15, 2023, the Company entered into Amended and Restated Senior Secured Convertible Notes with certain accredited investors to modify the original terms of the 12% Notes. We recorded amortization of debt discount expense from the 12% Notes of $117,648 and $77,551 for the three months ended June 30, 2024 and 2023, respectively and $206,832 and $154,250 for the six months ended June 30, 2024 and 2023, respectively.

In addition to the Amended Notes, the Lead Investor agreed to provide an additional $250,000 in a separate note (the “2023 Working Capital Note”) which includes a liquidation preference to recover 1.25x the original investment in the event that the Company commences any dissolution, liquidation, or winding up. At our option, the Lead Investor shall provide up to an additional $250,000, and, in such event, the 2023 Working Capital Note shall have a liquidation preference of 1.5x the original investment, applicable to the full $500,000, in the event that the Company commences any dissolution, liquidation, or winding up. The 2023 Working Capital Note bears interest at 12% per annum and is due and payable on September 15, 2026. As of December 31, 2023, the balance of the Working Capital Note was $500,000, as the Company requested and received the additional $250,000 optional amount.

On June 15^th, 2024 the Lead Investor agreed to provide an additional $250,000 in a separate note (the “2024 Working Capital Note”) which includes a liquidation preference to recover 1.25x the original investment in the event that the Company commences any dissolution, liquidation, or winding up. At our option, the Lead Investor shall provide up to an additional $250,000, and, in such event, the 2024 Working Capital Note shall have a liquidation preference of 1.5x the original investment, applicable to the full $500,000, in the event that the Company commences any dissolution, liquidation, or winding up. The 2024 Working Capital Note bears interest at 12% per annum and is due and payable on September 15, 2026. As of June 30, 2024, the balance of the Working Capital Note was $500,000, as the Company requested and received the additional $250,000 optional amount.