Convertible Debt and Other Debt

3 Months Ended

Mar. 31, 2022

Debt Disclosure [Abstract]

Convertible Debt and Other Debt

  5) Convertible Debt and Other Debt

Convertible Debt

On various dates during the three months ended March 31, 2022, the Company issued convertible notes for a total of $1,114,738 which contained varied terms and conditions as follows: a) 5-12 month maturity date; b) interest rates of 12%; c) convertible to the Company’s common stock at issuance at a fixed rate of $2.50 or at variable conversion rates upon the Company’s up-listing to NASDAQ or NYSE or an event of default. These notes were issued with either shares of common stock or warrants to purchase common stock that were fair valued at issuance date. The aggregate relative fair value of the shares of common stock and warrants issued with the notes of $229,916 was recorded as a debt discount to be amortized over the term of the notes. We also evaluated the convertible notes for derivative liability treatment and determined that the notes did not qualify for derivative accounting treatment at March 31, 2022.

The specific terms of the convertible notes and outstanding balances as of March 31, 2022 are listed in the tables below.

Inception Date	Term	Loan Amount		Outstanding balance with OID		Original Issue Discount (OID)		Interest Rate			Conversion Price			Deferred Finance Fees		Discount for conversion feature and warrants/shares
May 17, 2018 (1)(2)	12 months	$	380,000	$	98,544	$	15,200		8	%	$	2.50		$	15,200	$	332,407
January 3, 2019 (1)(4)	6 months	$	50,000	$	50,000	$	2,500		24	%	$	7.50		$	2,500	$	-
June 4, 2019 (1)(2)	9 months	$	500,000	$	302,484	$	-		8	%	$	2.50		$	40,500	$	70,631
July 19, 2019 (1) (2)	12 months	$	115,000	$	115,000	$	-		4	%	$	2.50		$	5,750	$	15,460
September 27,2019 (1) (2)	12 months	$	78,750	$	78,750	$	-		4	%	$	2.50		$	3,750	$	13,759
October 24, 2019 (1) (2)	12 months	$	78,750	$	78,750	$	-		4	%	$	2.50		$	3,750	$	-
November 15,2019 (1)	12 months	$	385,000	$	320,000	$	35,000		10	%	$	2.50		$	35,000	$	90,917
January 2,2020 (1)	12 months	$	330,000	$	330,000	$	30,000		10	%	$	2.50		$	30,000	$	91,606
January 24,2020 (1)	12 months	$	247,500	$	247,500	$	22,500		10	%	$	2.50		$	22,500	$	89,707
January 29, 2020 (1)	12 months	$	363,000	$	363,000	$	33,000		10	%	$	2.50		$	33,000	$	297,000
February 12, 2020 (1)	12 months	$	275,000	$	275,000	$	25,000		10	%	$	2.50		$	25,000	$	225,000
February 19,2020 (1)	12 months	$	165,000	$	165,000	$	15,000		10	%	$	2.50		$	15,000	$	135,000
March 11,2020 (1)	12 months	$	330,000	$	330,000	$	30,000		10	%	$	2.50		$	30,000	$	232,810
March 13, 2020 (1)	12 months	$	165,000	$	165,000	$	15,000		10	%	$	2.50		$	15,000	$	60,705
March 26, 2020 (1)	12 months	$	111,100	$	111,100	$	10,100		10	%	$	2.50		$	10,100	$	90,900
April 8, 2020 (1)	12 months	$	276,100	$	276,100	$	25,100		10	%	$	2.50		$	25,000	$	221,654
April 17,2020 (1)	12 months	$	143,750	$	143,750	$	18,750		10	%	$	2.50		$	-	$	96,208
April 30,2020 (1)	12 months	$	546,250	$	546,250	$	71,250		10	%	$	2.50		$	47,500	$	427,500
May 6, 2020 (1)	12 months	$	460,000	$	460,000	$	60,000		10	%	$	2.50		$	40,000	$	360,000
May 18,2020 (1)	12 months	$	546,250	$	221,250	$	46,250		10	%	$	2.50		$	35,500	$	439,500
June 2, 2020 (1)	12 months	$	902,750	$	652,750	$	92,750		10	%	$	2.50		$	58,900	$	708,500
June 12,2020 (1)	12 months	$	57,500	$	57,500	$	7,500		10	%	$	2.50		$	5,000	$	45,000
June 22, 2020 (1)	12 months	$	138,000	$	138,000	$	18,000		10	%	$	2.50		$	12,000	$	108,000
July 7, 2020 (1)	12 months	$	586,500	$	586,500	$	76,500		10	%	$	2.50		$	51,000	$	400,234
July 17, 2020 (1)	12 months	$	362,250	$	362,250	$	47,250		10	%	$	2.50		$	31,500	$	185,698
July 29, 2020 (1)	12 months	$	345,000	$	345,000	$	45,000		10	%	$	2.50		$	30,000	$	241,245
July 21, 2020 (1) (5)	12 months	$	115,000	$	115,000	$	15,000		10	%	$	2.50		$	10,000	$	24,875
August 14, 2020 (1)	12 months	$	762,450	$	462,450	$	69,450		10	%	$	2.50		$	66,300	$	580,124
September 10, 2020 (1)	12 months	$	391,000	$	391,000	$	51,000		10	%	$	2.50		$	34,000	$	231,043
September 21, 2020 (1) (5)	12 months	$	345,000	$	345,000	$	45,000		10	%	$	2.50		$	30,000	$	66,375
September 23, 2020 (1)	12 months	$	115,000	$	15,000	$	15,000		10	%	$	2.50		$	10,000	$	20,500
December 3, 2020 (1)	12 months	$	299,000	$	299,000	$	39,000		10	%	$	2.50		$	26,000	$	197,882
October 22, 2020 (1) (5)	12 months	$	115,000	$	115,000	$	15,000		10	%	$	2.50		$	10,000	$	18,875
February 17, 2021 (1)	12 months	$	230,000	$	230,000	$	30,000		10	%	$	2.50		$	20,000	$	180,000
March 23, 2021 (1)	12 months	$	55,000	$	55,000	$	5,000		10	%	$	2.50		$	-	$	36,431
May 6, 2021 (1)	12 months	$	402,500	$	402,500	$	52,500		10	%	$	2.50		$	35,000	$	312,551
June 17, 2021	12 months	$	230,000	$	230,000	$	30,000		10	%	$	2.50		$	20,000	$	144,760
June 25, 2021	12 months	$	977,500	$	977,500	$	127,500		10	%	$	2.50		$	-	$	773,802
June 3, 2021 (1)	6 months	$	50,000	$	50,000	$	1,500		12	%	$	2.50		$	-	$	7,948
March 1, 2022 (13)	6 months	$	700,000	$	700,000	$	84,000		12	%		(6	)	$	-	$	-
July 3, 2021	12 months	$	115,000	$	115,000	$	15,000		10	%	$	2.50		$	10,000	$	90,000
February 1, 2022 (14)	6 months	$	260,000	$	210,000	$	10,000		12	%	$	(7	)	$	2,000	$	-
February 4, 2022 (13)	8 months	$	500,000	$	500,000	$	30,000		12	%	$	(11	)	$	-	$	-
July 6, 2021 (1)	6 months	$	130,000	$	130,000	$	10,000		12	%	$	2.50		$	-	$	-
July 15, 2021 (1)	6 months	$	100,000	$	45,000	$	5,000		12	%		(7	)	$	-	$	57,716
January 19, 2022 (14)	6 months	$	52,000	$	52,000	$	2,000		12	%	$	2.50		$	2,000	$	-
January 20, 2022 (3) (14)	6 months	$	352,188	$	352,188	$	45,938		(3	)		(8	)	$	-	$	-
January 20, 2022 (3) (14)	6 months	$	352,188	$	352,188	$	45,938		(3	)		(8	)	$	-	$	-
January 20, 2022 (3) (14)	6 months	$	140,875	$	140,875	$	18,375		(3	)		(8	)	$	-	$	-
August 31, 2021	12 months	$	189,750	$	189,750	$	24,750		10	%		(9	)	$	16,500	$	148,500
Sept. 8, 2021 (1)	8 months	$	78,000	$	78,000	$	3,000		12	%		(7	)	$	-	$	40,449
Sept. 10, 2021 (1)	8 months	$	100,000	$	100,000	$	4,000		12	%		(7	)	$	-	$	43,520
Sept. 15, 2021 (1)	6 months	$	250,000	$	250,000	$	12,500		12	%		(7	)	$	-	$	108,801
Sept. 16, 2021 (1)	6 months	$	250,000	$	250,000	$	12,500		12	%		(7	)	$	-	$	112,337
Sept. 24, 2021	8 months	$	125,000	$	125,000	$	6,250		12	%		(7	)	$	-	$	61,876
Sept. 15, 2021 (1)	6 months	$	250,000	$	250,000	$	37,500		12	%		(7	)	$	30,000	$	-
October 21, 2021 (5)	12 months	$	189,750	$	189,750	$	24,750		12	%	$	2.50		$	16,500	$	87,332
November 1, 2021 (5)	12 months	$	189,750	$	189,750	$	24,750		12	%	$	2.50		$	-	$	96,991
December 7, 2021	12 months	$	169,500	$	118,650	$	19,500		12	%		(10	)	$	3,750	$	-
March 23,2022	8 months	$	56,500	$	56,500	$	6,500		12	%		(12	)	$	-	$	-
March 29, 2022	8 months	$	112,000	$	112,000	$	13,000		12	%		(12	)	$	-	$	-
February 9,2022	12 months	$	88,987	$	80,112	$	10,237		12	%		(10	)	$	-	$	-
March 30, 2022	12 months	$	10,000	$	10,000	$	-		12	%		2.50		$	-	$	38,400
				$	15,103,691	$	1,703,088							$	965,500	$	8,460,529

(1)	The Note is past due. The Company and the lender are negotiating in good faith to extend the loan.
(2)	The Company and lenders have entered into Standstill and Forbearance Agreements (as described below).
(3)	Note is secured by the assets of the Company’s subsidiary, PBI Agrochem, Inc. and interest rate is 40.9% OID.
(4)	During the year ended December 31, 2020, the Company entered into a Rate Modification Agreement with this lender. In this agreement the lender agreed to reduce their interest rate and were granted the right to convert loans using a variable conversion price if more than one other variable rate lender converted at a variable rate.
(5)	The Company has agreed to issue shares of its common stock to lenders if their notes are not repaid by a defined date.
(6)	Loan is not convertible until 180 days from the date of issuance of the Note and following an Event of Default will be convertible at the lowest trading price of the 20 days prior to conversion. The loan is guaranteed by the Company’s Chief Executive Officer, but the lender may only enforce this guarantee after certain conditions have been met, specifically after (i) the occurrence of an Event of Default (as defined in the Note), (ii) the failure of the Company to cure the Default in 10 business days, and (iii) a failure by the Company to issue, or cause to be issued, shares of its common stock upon submission by the lender of a notice of conversion.
(7)	Notes are convertible before maturity at $2.50 per share or mandatorily convertible when the Company up-lists to the NASDAQ at the lower of $2.50 or the up-list price.
(8)	Notes can be converted at the lesser of $2.50 per share or 25% discount to the opening price of the Company’s first day of trading on either Nasdaq or NYSE. In addition, if the Company fails to pay the Note in cash on maturity date, the conversion price will be adjusted to the lesser of original conversion price or the product of the VWAP of the common stock for the 5 trading dates immediately prior to the maturity date multiplied by 0.75.
(9)	Conversion price of this note is $2.50 and will be adjusted to, upon an Event of Default, the lower of (i) the conversion price or (ii) a 25% discount to the 5-day average VWAP of the stock prior to default. Additionally, if an up-list to a national exchange occurs while this note is outstanding, the conversion price shall be changed to the lower of (i) the conversion price or (ii) a 25% discount to the up-list price.
(10)	Notes are convertible upon an Event of Default at 75% multiplied by the lowest trading price for the common stock during the five days prior to the conversion.
(11)	Loans can be voluntarily converted before maturity at $2.50 per share. Lender retains the option upon an Up-list to convert at the lower of $2.50 or the 10% off Up-list price.
(12)	Notes are convertible at $2.50 per share except that following an Event of Default the conversion price will be adjusted to 75% multiplied by the lowest trading price for the common stock during the five days prior to the conversion.
(13)	During the three months ended March 31, 2022, the Company extended two loans totaling $475,000 and increased the principal to $1,200,000. The Company issued 60,000 shares of common stock for these extensions and added principal.
(14)	During the three months ended March 31, 2022, the Company extended five loans totaling $1,045,000 and increased the principal to 1,107,251 and issued 149,500 shares of common stock for the extensions.

As of March 31, 2022, one lender holds approximately $9.4 million of the $15.1 million convertible notes outstanding.

For the three months ended March 31, 2022, the Company recognized amortization expense related to the debt discounts indicated above of $794,242. The unamortized debt discounts as of March 31, 2022 related to the convertible debentures and other convertible notes amounted to $813,478.

Standstill and Forbearance Agreements

In recent years, the Company entered into Standstill and Forbearance Agreements with lenders who hold variable-rate convertible notes. Pursuant to these agreements the lenders agreed to not convert any portion of their notes into shares of common stock at a variable rate. The Company and two lenders ($673,528 outstanding principal at March 31, 2022) are negotiating in good faith to resolve the remaining loans.

In connection to these agreements, the Company incurred interest, penalties, and fees of approximately $202,050 in the three months ended March 31, 2022.

Convertible Loan Modifications and Extinguishments

We refinanced certain convertible loans during the three months ended March 31, 2022 at substantially the same terms for extensions ranging over a period of three to six months. We amortized any remaining unamortized debt discount as of the modification date over the remaining, extended term of the new loans. We applied ASC 470 of modification accounting to the debt instruments which were modified during the quarter or those settled with new notes issued concurrently for the same amounts but different maturity dates. The terms such as the interest rate, prepayment penalties, and default rates will be the same over the new extensions. According to ASC 470, an exchange of debt instruments between or a modification of a debt instrument by a debtor and a creditor in a nontroubled debt situation is deemed to have been accomplished with debt instruments that are substantially different if the present value of the cash flows under the terms of the new debt instrument is at least 10 percent different from the present value of the remaining cash flows under the terms of the original instrument. If the terms of a debt instrument are changed or modified and the cash flow effect on a present value basis is less than 10 percent, the debt instruments are not considered to be substantially different and will be accounted for as modifications.

The cash flows of new debt exceeded 10% of the remaining cash flows of the original debt on several loans. During the three months ended March 31, 2022 we recorded losses on extinguishment of liabilities of approximately $0.6 million by calculating the difference of the fair value of the new debt and the carrying value of the old debt.

The following table provides a summary of the changes in convertible debt, net of unamortized discounts, during 2022:

	2022
Balance at January 1,	$	12,839,813
Early adoption of ASU 2020-06		473,027
Issuance of convertible debt, face value		1,114,738
Deferred financing cost		(308,738	)
Debt discount from shares and warrants issued with debt		(229,916	)
Payments		(324,350	)
Conversion of debt into equity		(68,159	)
Accretion of interest and amortization of debt discount to interest expense		794,242
Balance at March 31,		14,290,657
Less: current portion		14,290,657
Convertible debt, long-term portion	$	–

Other Notes

As of March 31, 2022 the Company owes $691,500 on two notes to a private investor. During the three months ended March 31, 2022, the Company issued 100,000 warrants (3 year term, $3.50 strike price) to the lender. The Company and the lender are negotiating in good faith to extend these loans.

On October 1, 2019, the Company and the holder of the $170,000 non-convertible loan issued in May 2017 agreed to extend the term of the loan to December 31, 2019. The Company agreed to issue 1,200 shares of its common stock per month while the note remains outstanding. The note will continue to earn 10% annual interest. The loan is currently past due and the Company and the investor are negotiating in good faith to extend the loan.

Merchant Agreements

We have signed various Merchant Agreements which are secured by second position rights to all customer receipts until the loan has been repaid in full and subject to interest rates of 10.8% per month. As illustrated in the following table, under the terms of these agreements, we received the disclosed Purchase Price and agreed to repay the disclosed Purchase Amount, which is collected by the Merchant lenders at the disclosed Daily Payment Rate. The Company’s Chief Executive Officer (“Guarantor”) is guaranteeing that the Company will perform its obligations under the Agreement.  In no circumstance will Guarantor be asked or obligated to repay or be liable for the payment of any amount paid by Buyer to Seller, including, but not limited to, the Purchase Price.

The following table shows our Merchant Agreements as of March 31, 2022:

Inception Date	Purchase Price		Purchased Amount		Outstanding Balance		Payment frequency	Payment Rate		Deferred Finance Fees
February 10, 2022	$	120,000	$	157,560	$	67,285	Weekly		7,878.00	$	1,200
January 11, 2022	$	240,000	$	300,000	$	125,140	Weekly		11,112.00	$	-
December 21, 2021	$	400,000	$	520,000	$	268,775	Weekly		11,305.00	$	6,000
	$	760,000	$	977,560	$	461,200				$	7,200

The following table shows our Merchant Agreements as of December 31, 2021:

Inception Date	Purchase Price		Purchased Amount		Outstanding Balance		Payment frequency	Payment Rate		Deferred Finance Fees
December 21, 2021	$	400,000	$	520,000	$	390,120	Weekly		11,305.00	$	6,000
July 6, 2021		125,000		166,250		8,790	Daily		1,279.00		2,500
	$	525,000	$	686,250	$	398,910				$	8,500

We have accounted for the Merchant Agreements as loans under ASC 860 because while we provided rights to current and future receipts, we still had control over the receipts. The difference between the Purchase Amount and the Purchase Price is imputed interest that is recorded as interest expense when paid each day.

Related Party Notes

During the three months ended March 31, 2022, we received short-term non-convertible loans of $195,250 from related parties, which bear interest rates of 12% and are due upon demand.

Long term debt

The Company entered into a COVID-19 government loan in 2020, the Economic Injury Disaster Loan (or “EIDL”). The Company’s EIDL loan, $150,000, accrues interest at 3.75% and requires monthly payments of $731 for principal and interest beginning in December 2022. The balance of the principal will be due in 30 years. In connection with the EIDL loan the Company entered into a security agreement with the SBA, whereby the Company granted the SBA a security interest in all of the Company’s right, title and interest in all of the Company’s assets.