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FACTORING ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

9 Months Ended

Sep. 30, 2024

Factoring Advances And Non-convertible Notes Payable

FACTORING ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

NOTE 8 – FACTORING ADVANCES AND NON-CONVERTIBLE NOTES PAYABLE

Factoring Advances

On February 1, 2024, the Company entered into a revenue factoring advance in the principal amount of $1,340,000 for a purchase price of $970,000. There was an origination fee of $30,000. There were cash proceeds of $970,000 during the nine months ended September 30, 2024. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $25,800 through January 2025. The advance matured on January 23, 2025. There was amortization of debt discount of $0 during the three months ended September 30, 2024. There was amortization of debt discount of $370,000 during the nine months ended September 30, 2024. The Company made cash repayments of $606,400 during the nine months ended September 30, 2024. The Company realized a $0 and $733,600 gain on settlement during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0. The advance is retired.

On February 7, 2024, the Company entered into a revenue factoring advance in the principal amount of $822,000 for a purchase price of $572,950. There was an origination fee of $27,050. There were cash proceeds of $572,950 during the nine months ended September 30, 2024. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $30,444 through August 2024. The advance matured on August 31, 2024. There was amortization of debt discount of $0 during the three months ended September 30, 2024. There was amortization of debt discount of $249,050 during the nine months ended September 30, 2024. The Company made cash repayments of $668,556 during the nine months ended September 30, 2024. There was a gain on settlement $0 and $153,444 during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0. The advance is retired.

On February 29, 2024, the Company entered into a revenue factoring advance in the principal amount of $559,600 for a purchase price of $376,000. There was an origination fee of $24,000. There were cash proceeds of $376,000 during the nine months ended September 30, 2024. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $25,436 through July 2024. The advance matured on July 15, 2024. There was amortization of debt discount of $0 during the three months ended September 30, 2024. There was amortization of debt discount of $183,600 during the nine months ended September 30, 2024. The Company made cash repayments of $544,745 during the nine months ended September 30, 2024. There was a gain on settlement $0 and $14,855 during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0. The advance is retired.

On March 7, 2024, the Company entered into a revenue factoring advance in the principal amount of $1,499,000 for a purchase price of $700,000. There was an origination fee of $300,000. There were cash proceeds of $700,000 during the nine months ended September 30, 2024. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $125,000 through June 2024. The advance matured on June 6, 2024. There was amortization of debt discount of $0 during the three months ended September 30, 2024. There was amortization of debt discount of $799,000 during the nine months ended September 30, 2024. The Company made cash repayments of $1,375,000 during the nine months ended September 30, 2024. There was a gain on settlement $0 and $124,000 during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0. The advance is retired.

On March 7, 2024, the Company entered into a revenue factoring advance in the principal amount of $374,750 for a purchase price of $225,000. There was an origination fee of $25,000. There were cash proceeds of $225,000 during the nine months ended September 30, 2024. The Company’s Chief Executive Officer was personally liable for this factoring advance. The Company was required to make weekly payments in the amount $23,422 through July 2024. The advance matured on July 7, 2024. There was amortization of debt discount of $0 during the three months ended September 30, 2024. There was amortization of debt discount of $149,750 during the nine months ended September 30, 2024. The Company made cash repayments of $343,688 during the nine months ended September 30, 2024. There was a gain on settlement $0 and $31,062 during the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, the revenue factoring advance had a balance of $0, net an unamortized debt discount of $0. The advance is retired.

The remaining advances are 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 September 30, 2024 and December 31, 2023, the Company owed $85,000 for Simple Agreements for Future Tokens.

Non-Convertible Notes Payable

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 nine months ended September 30, 2024 and 2023, the Company made $22,812 and $15,848 in payments towards the financing agreement, respectively. There was amortization of debt discount of $1,340 and $1,326 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the financing agreement had a balance of $13,041 and $34,312, net an unamortized debt discount of $4,758 and $6,298, respectively.

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 nine months ended September 30, 2024 and 2023, the Company made $171,555 and $323,597 in payments towards the note, respectively. There was amortization of debt discount of $28,524 and $35,223 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $312,898 and $455,929 net an unamortized debt discount of $78,573 and $107,097, respectively.

On September 1, 2022, the Company entered into a Deed of Trust note for the purchase of land and buildings. The note has a principal amount of $600,000, bears an interest rate of 6.5%, and matures on September 1, 2032. The Company is required to make monthly payments of $4,476 until September 1, 2032, when the remaining principal and accrued interest becomes due. The Company made principal payments of $13,319 and $12,421 during the nine months ended September 30, 2024 and 2023, respectively. The Company made interest payments of $26,965 and $27,863 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a principal balance of $565,907 and $579,227 and accrued interest of $2,923 and $2,991 respectively.

On September 14, 2022, the Company entered into a secured promissory note in the principal amount of $2,980,692 for a purchase price of $2,505,000. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount $82,797 through September 2025. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on September 14, 2025. There was amortization of debt discount of $105,860 and $166,815 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $738,083 and $1,240,624 towards the note during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $636,569 and $1,268,792 net an unamortized debt discount of $65,624 and $171,484, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,539,630 for a purchase price of $1,078,502. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,410 through March 2023 and then monthly payments in the amount of $20,950 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $79,185 and $60,160 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $186,881 and $356,220 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $689,731 and $797,427 net an unamortized debt discount of $272,820 and $352,005, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,560,090 for a purchase price of $1,092,910. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,630 through March 2023 and then monthly payments in the amount of $21,225 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $118,286 and $60,950 during the nine months ended September 30, 2024 and 2023. respectively. There were payments of $189,334 and $362,553 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $734,900 and $805,949 net an unamortized debt discount of $238,879 and $357,164, respectively.

On November 28, 2022, the Company entered into a secured promissory note in the principal amount of $1,597,860 for a purchase price of $1,119,334. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,860 through March 2023 and then monthly payments in the amount of $21,740 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 5, 2029. There was amortization of debt discount of $52,560 and $62,430 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $194,128and $371,326 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $685,927 and $827,495 net an unamortized debt discount of $311,509 and $364,069, respectively.

On December 15, 2022, the Company entered into a secured promissory note in the principal amount of $1,557,435 for a purchase price of $1,093,380. The note is secured by certain assets of the Company. The Company is required to make monthly payments in the amount of $10,585 through March 2023 and then monthly payments in the amount of $21,190 through March 2029. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 15, 2029. There was amortization of debt discount of $50,747 and $57,956 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $188,877 and $361,826 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $669,770 and $807,900, net an unamortized debt discount of $302,621 and $353,367, respectively.

On January 10, 2023, the Company entered into a secured promissory note in the principal amount of $1,245,018 for a purchase price of $1,021,500. The note is secured by certain assets of the Company. There were cash proceeds of $1,000,000. The Company is required to make monthly payments in the amount of $10,365 through March 2023 and then monthly payments in the amount of $34,008 through March 2026. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on March 10, 2026. There was amortization of $48,783 and $50,122 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $303,302 and $398,675 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $393,725 and $648,244, net an unamortized debt discount of $94,171 and $142,954, respectively.

On January 12, 2023, the Company entered into a secured promissory note in the principal amount of $1,185,810 for a purchase price of $832,605. The note is secured by certain assets of the Company. There were non-cash proceeds of $832,605 used to purchase equipment. The Company is required to make monthly payments in the amount of $8,030 through April 2023 and then monthly payments in the amount of $16,135 through April 2028. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on April 12, 2028. There was amortization of debt discount of $79,231 and $47,352 during nine months ended September 30, 2024 and 2023, respectively. There were payments of $130,777 and $260,828 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $569,330 and $620,876, net an unamortized debt discount of $198,720 and $277,951, respectively.

On February 23, 2023, the Company entered into a secured promissory note in the principal amount of $822,040 for a purchase price of $628,353. The note is secured by certain assets of the Company. There were non-cash proceeds of $628,253 used to purchase equipment. The Company is required to make monthly payments in the amount of $6,370 through June 2023 and then monthly payments in the amount of $16,595 through June 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on June 23, 2027. There was amortization of debt discount of $2,317 and $26,094 during nine months ended September 30, 2024 and 2023, respectively. There were payments of $213,425 and $258,841 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $303,133 and $514,241, net an unamortized debt discount of $8,462 and $10,779, respectively.

On February 24, 2023, the Company entered into a secured promissory note in the principal amount of $1,186,580 for a purchase price of $832,605. The note is secured by certain assets of the Company. There were non-cash proceeds of $832,605 used to purchase equipment. The Company is required to make monthly payments in the amount of $9,185 through June 2023 and then monthly payments in the amount of $23,955 through June 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on June 24, 2027. There was amortization of debt discount of $107,570 and $34,483 during the nine months ended September 30, 2024 and 2023, respectively. There were payments of $147,862 and $197,975 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $620,469 and $660,761, net an unamortized debt discount of $193,390 and $300,960, respectively.

On April 12, 2023, the Company entered into a secured promissory note in the principal amount of $317,415 for a purchase price of $219,676. The note is secured by certain assets of the Company. There were non-cash proceeds of $219,676 used to purchase equipment. The Company is required to make monthly payments in the amount of $2,245 through August 2023 and then monthly payments in the amount of $4,315 through July 2027. The note bears an interest rate of 10.6%, is secured by certain assets of the Company, and matures on July 12, 2029. There were payments of $34,657 and $57,182 during the nine months ended September 30, 2024 and 2023, respectively. There was amortization of debt discount of $19,875 and $7,341 during the nine months ended September 30, 2024 and 2023, respectively. As of September 30, 2024 and December 31, 2023, the note had a balance of $168,881 and $183,663, net an unamortized debt discount of $49,763 and $69,638, respectively.

On July 31, 2023, the Company entered into a secured promissory note with an entity controlled by the Company’s Chief Executive Officer in the principal amount of $17,218,350. The note was for the purchase of certain equipment from an entity controlled by the Company’s Chief Executive Officer and is secured by such equipment. There were non-cash proceeds of $17,218,350 used to purchase equipment. The note is junior to the senior secured debt entered into by the Company on the same date. The note matures on July 31, 2043 and accrues interest at 7% per annum. The note requires interest-only payments until the senior secured debt is fully satisfied. The Company made payments of $0 and $291,440 towards the principal and interest, respectively, during the nine months ended September 30, 2024. On March 29, 2024, the holder of the note exchanged $10,000,000 in principal for 1,000 shares of Series D Preferred Stock (see Note 14 – Stockholders’ Equity). On April 21, 2024, the holder of the note exchanged $7,218,350 in principal for 412,360 shares of common stock (see Note 14 – Stockholders’ Equity). As of September 30, 2024 and December 31, 2023, the note had a balance of $0 and $17,218,350, respectively.

The following table details the current and long-term principal due under non-convertible notes as of September 30, 2024.

	Principal (Current)			Principal (Long Term)
GM Financial (Issued April 11, 2022)	$	14,837		$	2,962
Non-Convertible Note (Issued March 8, 2019)		-			5,000
Deed of Trust Note (Issued September 1, 2022)		53,712			512,195
Deed of Trust Note (Issued September 1, 2022)		53,712			512,195
Equipment Finance Note (Issued April 21, 2022)		231,120			160,351
Equipment Finance Note (Issued September 14, 2022)		702,193			-
Equipment Finance Note (Issued November 28, 2022)		251,401			711,150
Equipment Finance Note (Issued November 28, 2022)		254,700			719,079
Equipment Finance Note (Issued November 28, 2022)		260,880			736,556
Equipment Finance Note (Issued December 15, 2022)		254,280			718,111
Equipment Finance Note (Issued January 10, 2023)		408,096			79,800
Equipment Finance Note (Issued January 12, 2023)		193,620			574,430
Equipment Finance Note (Issued February 24, 2023)		287,460			526,399
Equipment Finance Note (Issued February 23, 2023)		193,620			117,975
Equipment Finance Note (Issued April 12, 2023)		51,780			166,864
SAFTs		-			85,000
Debt Discount		(660,954	)		(1,158,336	)
Total Principal of Non-Convertible Notes	$	2,550,457		$	4,469,731

Total principal payments due on non-convertible notes for 2024 through 2028 and thereafter is as follows:

Year ended December 31,
2024 (remaining)	$	802,853
2025		2,963,020
2026		1,525,409
2027		1,100,713
2028		785,128
Thereafter		1,662,355