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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the quarterly period ended June 30, 2021

 

Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the transition period from __________ to __________

 

Commission File Number: 000-52690

 

PETROLIA ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

 

Texas   86-1061005

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

710 N. Post Oak Road, Suite 400

Houston, Texas

  77024
(Address of principal executive offices)   (Zip Code)

 

(832-723-1266)

(Issuer’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act: None.

 

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No

 

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer ☐ Accelerated filer ☐
   
Non-accelerated filer Smaller Reporting Company
   
Emerging growth company  

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No

 

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 176,988,322 shares of common stock as of July 13, 2022.

 

 

 

 

 

 

TABLE OF CONTENTS

 

    Page
Part I Financial Information  
     
Item 1. Consolidated Financial Statements 3
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 21
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 24
     
Item 4. Controls and Procedures 24
     
Part II Other Information  
     
Item 1. Legal Proceedings 25
     
Item 1A. Risk Factors 26
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
Item 3. Defaults Upon Senior Securities 26
     
Item 4. Mine Safety Disclosures 26
     
Item 5. Other Information 26
     
Item 6. Exhibit Index 26
     
SIGNATURES 27
     
EXHIBITS 28

 

2

 

 

PART I: Financial Information

 

Item 1. Consolidated Financial Statements

 

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

 

   June 30, 2021   December 31, 2020 
   (unaudited)   (audited) 
ASSETS          
Current assets          
Cash  $32,079   $155,045 
Accounts receivable   5,046    5,000 
Other current assets   39,443    39,443 
Total current assets   76,568    199,488 
           
Property & equipment          
Oil and gas, on the basis of full cost accounting          
Evaluated properties   9,593,144    8,619,427 
Furniture, equipment & software   201,110    201,110 
Less accumulated depreciation and depletion   (3,408,425)   (2,868,453)
Net property and equipment   6,385,829    5,952,084 
           
Other assets          
Operating lease right-of-use asset   18,047    23,145 
Other assets   1,021,564    985,187 
           
Total Assets  $7,502,008   $7,159,904 
           
LIABILITIES & STOCKHOLDERS DEFICIT          
           
Current liabilities          
Accounts payable  $1,261,286   $1,067,841 
Accounts payable – related parties   810,765    587 
Operating lease liability – current   14,172    13,107 
Accrued liabilities   811,718    1,572,055 
Accrued liabilities – related parties   760,047    751,949 
Notes payable, current portion   3,268,889    3,037,737 
Notes payable – related parties, current portion   954,159    1,035,329 
Total current liabilities   7,881,036    7,478,605 
           
Asset retirement obligations   3,908,545    3,624,133 
Notes payable, net of current portion       573 
Operating lease liability   4,946    13,909 
Derivative liability   288,403    183,798 
Total Liabilities  $12,082,930   $11,301,018 
           
Stockholders’ Deficit          
Preferred stock, $0.001 par value, 1,000,000 shares authorized;
199,100 shares issued and outstanding
  $199   $199 
Common stock, $0.001 par value; 400,000,000 shares authorized; 176,988,322 and 168,696,226 shares issued and outstanding   176,988    168,696 
Additional paid in capital   60,117,076    59,044,519 
Shares to be issued        
Accumulated other comprehensive income   (303,837)   (266,432)
Accumulated deficit   (64,571,348)   (63,088,096)
Total Stockholders’ Deficit   (4,580,922)   (4,141,114)
           
Total Liabilities and Stockholders’ Deficit  $7,502,008   $7,159,904 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

3

 

 

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

 

   Three months ended
June 30, 2021
   Three months ended
June 30, 2020
   Six months ended
June 30, 2021
   Six months ended
June 30, 2020
 
Oil and gas sales                    
Oil and gas sales  $1,248,359   $509,221   $2,330,607   $990,342 
Total Revenue   1,248,359    509,221    2,330,607    990,342 
                     
Operating expenses                    
Lease operating expense   1,613,076    732,992    2,148,469    1,336,421 
Production tax       159    1,163    837 
General and administrative expenses   190,942    315,195    521,956    560,458 
Depreciation, depletion and amortization   253,285    220,929    436,424    523,307 
Asset retirement obligation accretion   93,518    65,670    181,724    114,615 
Total operating expenses   2,150,821    1,334,945    3,289,736    2,535,638 
                     
Loss from operations   (902,462)   (825,724)   (959,129)   (1,545,296)
                     
Other income (expenses)                    
Interest expense   (171,902)   (182,051)   (329,950)   (367,864)
Other income (expense)       4,364        4,771 
Change in fair value of derivative liabilities   83,111    (122,315)   (104,605)   (248,990)
Total other income (expenses)   (88,791)   (300,002    (434,555)   (612,083)
Net loss before taxes   (991,253)   (1,125,726)   (1,393,684)   (2,157,379)
                     
Series A Preferred Dividends   (44,893)   (44,675)   (89,568)   (89,350)
                     
Net Loss Attributable to Common Stockholders   (1,036,146)   (1,170,401)   (1,483,252)   (2,246,729)
                     
Loss per share                    
(Basic and fully diluted)  $(0.01)  $(0.01)  $(0.01)  $(0.01)
                     
Weighted average number of common shares outstanding, basic & diluted   176,988,322    165,296,226    173,854,195    165,218,190 
                     
Other comprehensive income, net of tax                    
Foreign currency translation adjustments   (39,732)   70,966    (37,405)   (58,337)
Comprehensive income (loss)  $(1,075,878)  $(1,099,435)  $(1,520,657)  $(2,305,066)

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

4

 

 

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

 

                                              
   Preferred stock   Common stock   paid-in   to be   comprehensive   Accumulated   equity 
   Shares   Amount   Shares   Amount   capital   issued   income   deficit   (deficit) 
Balance at December 31, 2019   199,100   $199    164,548,726   $164,549   $57,985,359   $55,375   $(218,565)  $(52,600,378)  $5,386,539 
                                              
Stock-based compensation                   155,211                155,211 
Common shares issued           591,250    591    54,784    (55,375)            
Series A preferred dividends                               (89,350)   (89,350)
Warrants issued as financing fees                   20,555                20,555 
Shares for conversion of related party debt           156,250    156    12,344                12,500 
Warrants issued with loans                   332,881                332,881 
Stock to be issued                         69,375            69,375 
Other comprehensive income (loss)                           (58,337)       (58,337)
Net loss                               (2,157,379)   (2,157,379)
Balance at June 30, 2020   199,100   $199    165,296,226   $165,296   $58,561,134   $69,375   $(276,902)  $(54,847,107)  $3,671,995 
                                              
Balance at December 31, 2020   199,100   $199    168,696,226   $168,696   $59,044,519   $   $(266,432)  $(63,088,096)  $(4,141,114)
                                              
Stock-based compensation                   54,923                54,923 
Series A preferred dividends                               (89,568)   (89,568)
Warrants issued as financing fee                   16,614                16,614 
Common shares issued for conversion of debt           2,700,000    2,700    86,400                89,100 
Common shares issued for settlement of related party fee           5,592,096    5,592    158,895                164,487 
Warrants issued for settlement of loans                   200,378                200,378 
Gain on modification of related party debt                   181,791                181,791 
Gain on issuance of shares for settlement of accrued related party fees                   373,556                373,556 
Other comprehensive income (loss)                           (37,405)       (37,405)
Net Income (loss)                               (1,393,684)   (1,393,684)
Balance at June 30, 2021   199,100   $199    176,988,322   $176,988   $60,117,076   $   $(303,837)  $(64,571,348)  $(4,580,922)

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

5

 

 

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

   Six months ended June 30, 2021   Six months ended June 30, 2020 
Cash Flows from Operating Activities          
Net income (loss)  $(1,393,684)  $(2,157,379)
Adjustment to reconcile net loss to net cash provided by (used in) operating activities:          
Depletion, depreciation and amortization   436,424    523,307 
Asset retirement obligation accretion   181,724    114,615 
Operating lease   (2,800)    
Amortization of debt discount   122,429    101,256 
Change in fair value of derivative liabilities   104,605    248,990 
Stock-based compensation expense   54,923    155,211 
Warrants issued as financing fees   16,614    20,555 
Changes in operating assets and liabilities          
Accounts receivable   (43)    
Other current assets       172,854 
Accounts payable   163,234    77,885 
Accounts payable – related parties   15,452     
Accrued liabilities   (127,235)   162,901 
Accrued liabilities – related parties   340,868    107,685 
Net cash flows from operating activities   (87,489)   (472,120)
           
Cash Flows from Investing Activities          
Escrow for property purchase        
Cash flows from investing activities        
           
Cash Flows from Financing Activities          
Proceeds from notes payable       441,680 
Repayments on notes payable   (20,969)   (37,319)
Proceeds from related party notes payable       200,000 
Repayments on related party notes payable   (17,613)   (48,160)
Shares to be issued       69,375 
Cash flows from financing activities   (38,582)   625,576 
           
Changes in foreign exchange rate   3,105    (108,692)
           
Net change in cash   (122,966)   44,764 
Cash at beginning of period   155,045    34,513 
Cash at end of period  $32,079   $79,277 

 

SUPPLEMENTAL DISCLOSURES

 

   Six months ended June 30, 2021   Six months ended June 30, 2020 
SUPPLEMENTAL DISCLOSURES          
Interest paid  $165,354   $101,693 
Income taxes paid        
NON-CASH INVESTING AND FINANCIAL DISCLOSURES          
Series A preferred dividends accrued   89,568    89,350 
Debt discount on warrant issue       332,881 
Conversion of related party debt and payables   557,520     
Modification of related party debt   

181,250

      
Settlement of notes payable related party for common shares   135,000    12,500 
Issuing of previous shares to be issued       55,375 
Utikuma acquisition – purchase price       788,835 
Utikuma acquisition – initial ARO       906,146 
Utikuma acquisition – extra cost triggered by WTI   787,250     
Third party loan for Utikuma purchase       1,000,000 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

6

 

 

PETROLIA ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(Unaudited)

 

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION:

 

Petrolia Energy Corporation (the “Company”) is in the business of oil and gas exploration, development and production.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the year ended December 31, 2020, as reported in Form 10-K, have been omitted.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Leases

 

Leases are classified as operating leases or financing leases based on the lease term and fair value associated with the lease. The assessment is done at lease commencement and reassessed only when a modification occurs that is not considered a separate contract.

 

Lessee arrangements

 

Where the Company is the lessee, leases classified as operating leases are recorded as lease liabilities based on the present value of minimum lease payments over the lease term, discounted using the lessor’s rate implicit in the lease or the Company’s incremental borrowing rate, if the lessor’s implicit rate is not readily determinable. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Corresponding right-of-use assets are recognized consisting of the lease liabilities, initial direct costs and any lease incentive payments.

 

Lease liabilities are drawn down as lease payments are made and right-of-use assets are depreciated over the term of the lease. Operating lease expenses are recognized on a straight-line basis over the term of the lease, consisting of interest accrued on the lease liability and depreciation of the right-of-use asset, adjusted for changes in index-based variable lease payments in the period of change.

 

Lease payments on short-term operating leases with lease terms twelve months or less are expensed as incurred.

 

Fair Value of Financial Instruments

 

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of June 30, 2021, the amounts reported for cash, accrued interest and other expenses, notes payable, convertible notes, and derivative liability approximate the fair value because of their short maturities.

 

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

 

7

 

 

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:

 

  Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment;
  Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and
  Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

 

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows as of June 30, 2021, and December 31,2020.

 

June 30, 2021  Level 1   Level 2   Level 3   Total 
Derivative liabilities           288,403    288,403 
ARO liabilities           3,908,545    3,908,545 
                     
December 31, 2020                    
Derivative liabilities           183,798    183,798 
ARO liabilities           3,624,133    3,624,133 

 

NOTE 3. GOING CONCERN

 

The Company has suffered recurring losses from operations and currently has a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company plans to generate profits by reworking its existing oil or gas wells, as needed, funding permitting. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. The Company does not have any commitments or arrangements from any person to provide the Company with any additional capital.

 

If additional financing is not available when needed, we may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

 

8

 

 

NOTE 4. EVALUATED PROPERTIES

 

The Company’s current properties can be summarized as follows.

 SCHEDULE OF COMPANY’S CURRENT PROPERTIES

Cost  Canadian properties   United States properties   Total 
As of December 31, 2019  $2,563,434   $10,350,538   $12,913,972 
Additions   678,765        678,765 
Dispositions       (5,648,994)   (5,648,994)
Impairment of oil and gas properties       (396,922)   (396,922)
Asset retirement cost additions   906,146        906,146 
Foreign currency translation   166,460        166,460 
As of December 31, 2020  $4,314,805   $4,304,622   $8,619,427 
Additions   787,250        787,250 
Foreign currency translations   186,467        186,467 
As of June 30, 2021  $5,288,522   $4,304,622   $9,593,144 
                
Accumulated depletion               
As of December 31, 2019   1,458,976    61,551    1,520,527 
Depletion   1,115,595        1,115,595 
Foreign currency translation   57,178        57,178 
As of December 31, 2020  $2,631,749   $61,551   $2,693,300 
Depletion   420,931        420,931 
Foreign currency translation   103,548        103,548 
As of June 30, 2021  $3,156,228   $61,551   $3,217,779 
                
Net book value as of December 31, 2020  $1,683,056   $4,243,071   $5,926,127 
Net book value as of June 30, 2021  $2,132,294   $4,234,071   $6,375,365 

 

On August 6, 2019, the Company entered into a Purchase and Sale Agreement (“PSA”) for the sale of the NOACK property with Flowtex Energy LLC. (“FT”). The purchaser agreed to pay $400,000 for the NOACK Assets including a $20,000 deposit that was received on August 15, 2019, and the remaining balance of $380,000 to be received by September 30, 2019. By December 31, 2019, FT had made cumulative payments of $375,000, resulting in a $25,000 account receivable to the Company on June 30, 2021, which is included in other current assets. The $400,000 was recorded as a gain on sale of properties. On July 6, 2021, the remaining $25,000 accounts receivable was settled via the following: the purchaser remitted a cash payment of $8,995, as well as paying (on the Company’s behalf) $16,005 of outstanding property tax invoices previously incurred by the Company.

 

On May 1, 2020, Petrolia Energy Corporation acquired a 50% working interest in approximately 28,000 net working interest acres located in the Utikuma Lake area in Alberta, Canada. The property is an oil-weighted asset currently producing approximately 500 bopd of light oil. The working interest was acquired from Blue Sky Resources Ltd. in an affiliated party transaction as Zel C. Khan, the Company’s former Chief Executive Officer, is related to the ownership of Blue Sky. Blue Sky acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. via Vermilion’s subsidiary Vermilion Resources. The effective date of the acquisition was May 1, 2020. The total purchase price of the property was $2,000,000 (CND), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of WTI crude. At the time WTI price exceeded $50/bbl, the Company would pay an additional $750,000 (CND). In addition, at the time WTI price exceeded $57/bbl the Company would pay an additional $250,000 (CND) (for a cumulative contingent total of $1,000,000 The price of WTI crude exceeded $50/bbl on January 6, 2021, and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from BSR. The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“AER”) bond fund requirement ($621,999), necessary for the wells to continue in production after the acquisition. Additional funds ($399,564 USD) remain in the other current asset balance for future payments from BSR, related to the acquisition.

 

On July 27, 2020, the Company entered into a settlement agreement with their Trustee pursuant to which nine leases totaling approximately 3,800 acres of the 4,880-acre Twin Lakes San Andres Unit were forfeited as a part of the settlement agreement. Consequently, the Company no longer has the right to produce oil, gas, or other hydrocarbons and any other minerals from the mineral estate encumbered by the leases and owned by the Trustee. The company accounted for the forfeiture of the TLSAU properties, in accordance with Reg S-W.T.Rule 4-10(c)(6). Accordingly, an analysis of multi-period reserve reports was performed to determine the percentage of the cumulative US full cost pool’s reserves that were forfeited (56% or 943,820). Then that percentage was multiplied by the period end net property balance of $10,175,456. This resulted in a write down of $5,648,994 ($10,175,456 * 56%) of the US cost pool, which was recorded as part of operating expenses for the year ended December 31, 2020. Note that both TLSAU and SUDS make up the US full cost pool.

 

On April 8, 2021, the State of New Mexico Energy, Minerals and Natural Resources Oil Conservation Division (“OCD”) sent the Company a Notice of Violation alleging that the Company was not in compliance with certain New Mexico Oil and Gas Act regulations associated with required reporting, inactive wells, and financial assurance requirements. The OCD proposed an assessment of approximately $35,100. On December 30, 2021, the Company entered a Stipulated Final Order to resolve the matter. The company agreed to submit appropriate forms for the identified wells, open an escrow account and deposit funds into it, and provide the OCD with a report proposing deadlines for bringing all remaining wells into compliance. The first two wells were plugged in June of 2022. See Form 8-K reference in Exhibits section below.

 

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NOTE 5. LEASES

 

Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as an ROU asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019, and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.

 

Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

 

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of June 30, 2021, we did not have any short-term leases.

 

The tables below present financial information associated with our lease.

 

   Balance Sheet Classification  June 30, 2021   December 31, 2020 
            
Right-of-use assets  Other long-term assets   18,047    23,145 
Current lease liabilities  Other current liabilities   14,172    13,107 
Non-current lease liabilities  Other long-term liabilities   4,946    13,909 

 

As of June 30, 2021, the maturities of our lease liability are as follows:

 

      
2021  $14,172 
2022   4,946 
Total  $19,118 
Less: Imputed interest   (1,071)
Present value of lease liabilities  $18,047 

 

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NOTE 6. NOTES PAYABLE

 

The following table summarizes the Company’s notes payable:

 

   Interest rate   Date of maturity   June 30, 2021   December 31, 2020 
Truck loan (i)  5%   January 20, 2022   $6,017   $9,917 
Credit note I (ii)  12%   May 11, 2021        800,000 
Credit note II (iii)  12%   October 17, 2019        346,038 
Credit note III (iv)  15%   April 25, 2021        750,000 
Discount on credit note III              (5,976)
Credit note IV(v)  10%   June 30, 2021    916,024    937,109 
Discount on credit note IV          (191,385)   (285,768)
Credit note V(vi)  10%   December 31, 2021    918,049     
Credit note VI (vii)  10%   December 31, 2021    1,133,104     
Lee Lytton      On demand    3,500    3,500 
Joel Oppenheim (viii)  10%   On demand        161,900 
Joel Oppenheim (viii)  10%   On demand        15,000 
Joel Oppenheim(viii)  10%   October 17, 2018        240,000 
Credit Note VII (viii)  10%   December 31, 2021    416,900     
Origin Bank (PPP loan) (ix)          56,680    56,680 
M. Horowitz  10%   October 14, 2016    10,000    10,000 
            $3,268,889   $3,038,310 
Current portion:                   
Truck loan           $6,017   $9,345 
Credit note I                800,000 
Credit note II                346,038 
Credit note III                744,023 
Credit note IV            724,639    651,251 
Credit note V            918,049     
Credit note VII            1,133,104     
Lee Lytton            3,500    3,500 
Joel Oppenheim                161,900 
Joel Oppenheim                15,000 
Joel Oppenheim                240,000 
Credit note VII            416,900     
Origin Bank (PPP loan)            56,680    56,680 
M. Horowitz            10,000    10,000 
Current portion of notes payable           $3,268,889   $3,037,737 

 

  (i) On January 6, 2017, the Company purchased a truck and entered into an installment note in the amount of $35,677 for a term of five years and interest at