| Related Party Notes Payable |
6. RELATED PARTY NOTES PAYABLE
The following table summarizes the Company’s
related party notes payable:
| |
|
|
|
|
|
|
Balance at: |
|
| |
|
Interest rate |
|
|
Date of maturity |
|
March 31, 2020 |
|
|
December 31, 2019 |
|
| Lee Lytton |
|
|
— |
|
|
On demand |
|
|
— |
|
|
|
3,500 |
|
| Quinten Beasley |
|
|
10 |
% |
|
October 14, 2016 |
|
|
10,000 |
|
|
|
10,000 |
|
| Joel Oppenheim (i) |
|
|
— |
|
|
On demand |
|
|
176,900 |
|
|
|
217,208 |
|
| Joel Oppenheim (i) |
|
|
— |
|
|
On demand |
|
|
15,000 |
|
|
|
15,000 |
|
| Jovian Petroleum Corporation(ii) |
|
|
3.5 |
% |
|
December 31, 2021 |
|
|
475,543 |
|
|
|
362,583 |
|
| Ivar Siem (iii) |
|
|
12 |
% |
|
On demand |
|
|
100,000 |
|
|
|
100,000 |
|
| Ivar Siem (iii) |
|
|
12 |
% |
|
On demand |
|
|
75,000 |
|
|
|
75,000 |
|
| Ivar Siem |
|
|
— |
|
|
|
|
|
50,000 |
|
|
|
— |
|
| Joel Oppenheim (iii) |
|
|
12 |
% |
|
October 17, 2018 |
|
|
240,000 |
|
|
|
200,000 |
|
| |
|
|
|
|
|
|
|
$ |
1,142,443 |
|
|
$ |
983,291 |
|
| |
(i) |
Balances are non-interest bearing and due on demand. |
| |
|
|
| |
(ii) |
On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $200,000 (subsequently increased to $500,000 on April 12, 2018) with Jovian Petroleum Corporation (“Jovian”). The CEO of Jovian is Quinten Beasley, our former director (resigned October 31, 2018), and 25% of Jovian is owned by Zel C. Khan, our CEO and director. The initial agreement was for a period of 6 months and it can be extended for up to 5 additional terms of 6 months each. All amounts advanced pursuant to the LOC will bear interest from the date of advance until paid in full at 3.5% simple interest per annum. Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. Subsequent to period-end this LOC has been extended until December 31, 2020. |
| |
(iii) |
On August 17, 2018, the Company sold an aggregate of $90,000 in convertible promissory notes (the “Director Convertible Notes”), to the Company’s directors, Ivar Siem ($20,000) through an entity that he is affiliated with; Leo Womack ($60,000); and Joel Oppenheim ($10,000). The Director Convertible Notes accrue interest at the rate of 12% per annum until paid in full and were due and payable on October 17, 2018. The amount owed may be prepaid at any time without penalty. The outstanding principal and interest owed under the Director Convertible Notes are convertible into common stock of the Company, from time to time, at the option of the holders of the notes, at a conversion price of $0.10 per share. As additional consideration for entering into the notes, the Company agreed to grant warrants to purchase one share of the Company’s common stock at an exercise price of $0.10 per share for each dollar loaned pursuant to the Director Convertible Notes (the “Bridge Note Warrants”). The warrants had a contractual life of one year. As such, the Company granted (a) 20,000 Bridge Note Warrants to an entity affiliated with Ivar Siem; (b) 60,000 Bridge Note Warrants to Leo Womack; and (c) 10,000 Bridge Note Warrants to Joel Oppenheim. The Director Convertible Notes contain standard and customary events of default. The Company fair valued the warrants issued using the Black-Scholes Option Pricing Model for a total fair value of $6,249. On October 22, 2018, $60,000 in Director Convertible Notes were settled by offsetting against $60,000 proceeds required for the exercise of warrants. |
| |
|
|
| |
(iv)
|
On June 8, 2018, the Company entered into a promissory note (an “Acquisition Note”) with Blue Sky in the amount of CAD$406,181. The Note bears interest at 9% per annum and is due in full at maturity on November 30, 2018. The Company may, at its sole discretion, extend the maturity date for a period of Nine months with notice to the lender and payment of 25% of the principal amount. At December 31, 2018, the maturity date had been extended to May 31, 2019. On April 1, 2019, the Company utilized its LOC with Jovian to pay off in its entirety the June 8, 2018 Acquisition Note with Blue Sky. |
During 2019, $120,000 of related party notes and payables
were converted to shares. Specifically, Leo Womack for $ 20,000, Joel Oppenheim for $40,000, Jovian for $40,000 and American Resources
for $20,000. See Note 10 for further explanation.
On January 20, 2020, Jovian, a related party, purchased
1 unit of the debt private placement of $12,500 that was funded through their LOC. At maturity, the holder has the option to either collect
the principal or convert the balance into shares/warrants. The conversion would be for 156,250 shares ($0.08 per share) of common stock
and warrants to purchase 312,500 shares of common stock at a price of $0.08 per unit. Jovian converted the debt into shares during 2020.
During the three months ended March 31, 2020 the shares were issued to Jovian.
The following is a schedule of future minimum repayments
of related party notes payable as of March 31, 2020:
| 2020 |
|
$ |
1,142,443 |
|
| Thereafter |
|
|
— |
|
| |
|
$ |
1,142,443 |
|
|