NOTES PAYABLE |
NOTE
5. NOTES PAYABLE
SCHEDULE OF NOTES PAYABLE
|
|
Interest rate |
|
|
Date of maturity |
|
December 31, 2020 |
|
|
December 31, 2019 |
|
Truck loan (ii) |
|
|
5.49 |
% |
|
January 20, 2022 |
|
|
9,916 |
|
|
|
16,141 |
|
Credit note I (iii) |
|
|
12 |
% |
|
May 11, 2021 |
|
|
800,000 |
|
|
|
800,000 |
|
Credit note II (iv) |
|
|
12 |
% |
|
October 17, 2019 |
|
|
346,038 |
|
|
|
346,038 |
|
Credit note III (v) |
|
|
15 |
% |
|
April 25, 2021 |
|
|
750,000 |
|
|
|
750,000 |
|
Discount on credit note III |
|
|
— |
|
|
— |
|
|
(5,976 |
) |
|
|
(25,101 |
) |
Credit note VI(vi)
|
|
|
10 |
% |
|
January 01, 2020 |
|
|
937,019 |
|
|
|
— |
|
Discount on credit note VI |
|
|
|
|
|
|
|
|
(285,768 |
) |
|
|
— |
|
Lee Lytton(i)
|
|
|
|
|
|
On demand |
|
|
3,500 |
|
|
|
— |
|
Joel Oppenheim (vii) |
|
|
10 |
% |
|
On demand |
|
|
161,900 |
|
|
|
— |
|
Joel Oppenheim (vii) |
|
|
10 |
% |
|
On demand |
|
|
15,000 |
|
|
|
— |
|
Joel Oppenheim(vii)
|
|
|
10 |
% |
|
October 17, 2018 |
|
|
240,000 |
|
|
|
— |
|
Origin Bank (PPP loan) |
|
|
|
|
|
|
|
|
56,680 |
|
|
|
— |
|
Mark Allen(viii)
|
|
|
12 |
% |
|
June 30, 2021 |
|
|
— |
|
|
|
200,000 |
|
M. Hortwitz |
|
|
10 |
% |
|
October 14, 2016 |
|
|
10,000 |
|
|
|
10,000 |
|
|
|
|
|
|
|
|
|
|
3,038,309 |
|
|
|
2,097,078 |
|
Current portion: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Truck loan |
|
|
|
|
|
|
|
|
9,343 |
|
|
|
7,502 |
|
Credit note I |
|
|
|
|
|
|
|
|
800,000 |
|
|
|
90,000 |
|
Credit note II |
|
|
|
|
|
|
|
|
346,038 |
|
|
|
346,038 |
|
Credit note III |
|
|
|
|
|
|
|
|
744,023 |
|
|
|
— |
|
Credit note VI |
|
|
|
|
|
|
|
|
651,251 |
|
|
|
— |
|
M. Hortwitz |
|
|
|
|
|
|
|
|
10,000 |
|
|
|
10,000 |
|
Lee Lytton |
|
|
|
|
|
|
|
|
3,500 |
|
|
|
— |
|
Joel Oppenheim |
|
|
|
|
|
|
|
|
176,900 |
|
|
|
— |
|
Joes Oppenheim |
|
|
|
|
|
|
|
|
240,000 |
|
|
|
— |
|
Mark Allen |
|
|
|
|
|
|
|
|
— |
|
|
|
200,000 |
|
Origin Bank (PPP Loan) |
|
|
|
|
|
|
|
|
56,680 |
|
|
|
— |
|
Current portion of notes payable |
|
|
|
|
|
|
|
$ |
3,037,737 |
|
|
$ |
653,540 |
|
|
(i) |
Note
needs to be settled with the estate of Lee Lytton. |
|
|
|
|
(ii) |
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 5.49% per annum. Payments of principal and interest in the amount of $683 are due monthly. |
|
|
|
|
(iii) |
On
May 9, 2018, Bow entered into an Amended and Restated Loan Agreement with a third party. The Loan Agreement increased by $800,000
the amount of a previous loan agreement entered into between Bow and the Lender, to $1,530,000. The amount owed under the Loan Agreement
accrues interest at the rate of 12% per annum (19% upon the occurrence of an event of default) and is due and payable on May 11,
2021, provided that the amount owed can be prepaid prior to maturity, beginning 60 days after the date of the Loan Agreement, provided
that the Company gives the Lender 10 days’ notice of our intent to repay and pays the Lender the interest which would have
been due through the maturity date at the time of repayment. The Loan Agreement contains standard and customary events of default,
including cross defaults under other indebtedness obligations of us and Bow, and the occurrence of any event which would have a material
adverse effect on us or Bow. The Company is required to make principal payments of $10,000 per month from January through September
2019 with the remaining balance of $710,000 due at maturity on May 11, 2021. |
|
|
|
|
|
The
additional $800,000 borrowed in connection with the entry into the Loan Agreement was used by the Company to acquire the Working
Interest in the Canadian Properties. |
|
|
|
|
|
In
order to induce the Lender to enter into the Loan Agreement, the Company agreed to issue the Lender 500,000 shares of restricted
common stock (the “Loan Shares”), which were issued on May 18, 2018, and warrants to purchase 2,320,000 shares of common
stock (the “Loan Warrants”), of which warrants to purchase (a) 320,000 shares of common stock have an exercise price
of $0.10 per share in Canadian dollars and expire in May 15, 2021, (b) 500,000 shares of common stock have an exercise price of $0.12
per share in U.S. dollars, and expire on May 15, 2021; and (c) 1,500,000 shares of common stock have an exercise price of $0.10 per
share in U.S. dollars and expire on May 15, 2020. |
|
|
|
|
|
The
fair value of the 500,000 common shares issued were assessed at the market price of the stock on the date of issuance and valued
at $47,500. The fair value of the Canadian dollar denominated warrants issued were assessed at $30,012 using the Black Scholes Option
Pricing Model. The fair value of the U.S. dollar denominated warrants issued were assessed at $182,650 using the Black Scholes Option
Pricing Model. The Company determined the debt modification to be an extinguishment of debt and recorded a total loss on extinguishment
of debt of $260,162. |
|
|
|
|
|
Upon
the disposition of Bow pursuant to the Exchange Agreement, a total of $730,000 of the obligations owed under
the Loan Agreement were transferred to Blue Sky. |
|
|
|
|
(iv) |
On
September 17, 2018, the Company entered into a loan agreement (LOC) with a third party for $200,000 (which was later increased to
$500,000) to acquire an additional 3% working interest in the Canadian Properties. The loan bears interest at 3.5% per
annum and has a maturity date of October 17, 2019. Payments of principal and interest in the amount of $6,000 are due monthly. The
loan is secured against the Company’s 3% Working Interest in the Canadian Properties and has no financial covenants.
During
2019, the LOC balance increased by $150,000 resulting in a $346,038 ending balance. During 2020, the LOC balance decreased by $157,753
resulting in a $188,285 ending balance.
|
|
|
|
|
(v) |
On
April 25, 2019, the Company entered into a promissory note (an Acquisition Note”) with a third party in the amount of $750,000
to acquire working interests
in the Utikuma oil field in Alberta Canada. The Note bears interest at 15%
per annum and is due in full at maturity at April 25, 2021. No payments are required on the note until maturity while interest is
accrued. In addition, warrants to purchase 500,000
shares of common stock
with an exercise price of $0.012
per share expiring on
May 1, 2021 were issued associated with the note and were recorded as a debt discount of $5,976 on the balance sheet. The
notes hold a security guarantee of a 50%
Working Interest in the Utikima oil field and a 100%
Working Interest in the Twin Lakes Properties. |
|
(vi)
|
On
January 2, 2020, the Company entered into a loan agreement in the amount of $1,000,000
with a third party (including
a $120,000
origination fee). The
note bore interest at an interest rate of $10%
per annum and matures on June 30, 2020, with warrants to purchase 5,000,000
shares of common stock
(the “Loan Warrants”), at an exercise price of $0.10
per share in Canadian
dollars and expire in January 2, 2023. The fair value of issued warrants were recorded as a debt discount of $266,674
and monthly amortization
of $11,111.
These funds were placed in escrow for the future purchase of the Utikuma oil field. |
|
|
|
|
(vii) |
Various
Shareholder Advances provided by Mr. Oppenheim during 2018 and 2019. There were no formal
documents drawn. Interest rates were applied based on other similar loan agreements entered
into by the Company during that period. On February 22, 2021, Mr. Oppenheimer combined
the loans, which now bear an interest rate of 10% and are due on December 31, 2021.
|
|
|
During
2019, the Company entered into a loan agreement in the amount of $200,000 with a third party. The note bears interest at an interest
rate of 12% per annum and matures on June 30, 2021. At the maturity date, the note holder has the right to collect the principal
plus interest or convert into 2,500,000 shares of common stock at $0.08 per share. In addition, upon conversion, the note holder
will also receive 10,000,000 warrants at an exercise price of $0.10 per share, vesting immediately with a 36 month expiration period.
On
January 15, 2019, the Company entered into a loan agreement in the amount of $125,000
with a third party. The note bore interest
at an interest rate of $4%
per annum and was to mature on January 15, 2020. On September 30, 2019, Jovian Petroleum Corporation reimbursed the $125,000
to the third party. Consequently, the $125,000
debt balances was transferred into the Jovian LOC and is now included in the $362,583
at December 31, 2020 (see Note 7:
Related Party Notes Payable)
On
April 23, 2020, the Company was granted a $56,680 business loan through the Paycheck Payment Protection (PPP) program administered
through the CARES act. The loan amount was based 2.5 times the Company’s average monthly payroll costs. The Company is in the
process of applying for loan forgiveness and expects to be granted the forgiveness. If forgiveness is granted, the loan principal
will not have to be repaid. If not, the loan will earn 1% annual interest and will mature in 2 years.
|
|
|
|
|
(viii) |
Mark Allen became a related party in 2020, therefore his note has been moved
to that schedule. |
The
following is a schedule of future minimum repayments of notes payable as of December 31:
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE
|
|
|
|
|
2021 |
|
|
3,037,737 |
|
2022 |
|
|
573 |
|
Thereafter |
|
|
— |
|
Total |
|
$ |
3,038,310 |
|
|