Annual report pursuant to Section 13 and 15(d)

NOTES PAYABLE (Tables)

v3.22.2.2
NOTES PAYABLE (Tables)
12 Months Ended
Dec. 31, 2021
Debt Disclosure [Abstract]  
SCHEDULE OF NOTES PAYABLE

 SCHEDULE OF NOTES PAYABLE

    Interest rate     Date of maturity     December 31, 2021     December 31, 2020  
Truck loan (ii)     5.49 %     January 20, 2022     $ 4,021     $ 9,916  
Credit note I (iii)     12 %     May 11, 2021             800,000  
Credit note II (iv)     12 %     October 17, 2019             346,038  
Credit note III (v)     15 %     April 25, 2021             750,000  
Discount on credit note III                       (5,976 )
Credit note IV (vi)     10 %     January 01, 2020       831,387       937,019  
Discount on credit note IV                     (97,001 )     (285,767 )
Credit note V(vii)     10 %     December 31, 2022       2,085,432        
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 VI (viii)     10 %     December 31, 2021       416,900        
Origin Bank (PPP loan) (ix)                           56,680  
Quinten Beasley     10 %     October 14, 2016       5,000      

 

 
Jovian Petroleum Corporation (x)     3.5 %     December 31, 2021       178,923        
M. Hortwitz     10 %     October 14, 2016       10,000       10,000  
                    $ 3,438,162 (1) $ 3,038,310  

 

  (i) All notes are current (due within one year or less from December 31, 2021.)
     
  (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 a 25% working interest in approximately 41,526 acres located in the Luseland, Hearts Hill, and Cuthbert fields, located in Southwest Saskatchewan and Eastern Alberta, Canada (collectively, the “Canadian Properties” and the “Working Interest”). Upon the disposition of Bow, a total of $730,000 of the obligations owed under the Loan Agreement were transferred to Blue Sky Resources Ltd. (“Blue Sky”).

 

 

    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.
     
    On January 1, 2021, the Lender signed an amended loan agreement, combining Credit note I and $200,000 of Credit note II which moved the balance of this note to credit note VI and accrued interest.
     
    On December 1, 2021, the Lender signed another amended loan agreement, combining the new note with the combined note of Credit note III and $146,038 of Credit note II and accrued interest on those amounts to Credit note V. More details can be found in footnote (vii)
     
  (iv) On September 17, 2018, the Company entered into a loan agreement with a third party for $200,000 to acquire an additional 3% working interest in the Canadian Properties. The loan bears interest at 12% 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 2020, the balance increased by $146,000 resulting in a $346,038 ending balance. On January 1, 2021, the Lender signed amended loan agreements, which moved the balance of this note to new credits notes. More details can be found in footnotes (iii) and (v).
     
  (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 9% per annum and is due in full at maturity on 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 $0.12 per share expiring on May 1, 2021, were issued associated with the note. The fair value of issued warrants were recorded as a debt discount of $38,249 and amortization of $8,366. The notes hold a security guarantee of working interest in the Utikuma oil field and a working interest in the TLSAU field. On January 1, 2021, the Lender signed an amended loan agreement consolidating this loan with $146,038 of Credit Note II and accrued interest on those amounts.
     
    On December 1, 2021, the Lender signed another amended loan agreement, combining the new note with the combined note of Credit note I and $200,000 of Credit note II and accrued interest on those amounts to Credit note V. More details can be found in footnote (vii)
     
  (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 on 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 initially placed in escrow, then on May 29, 2020, they were used for the purchase of the Utikuma oil field. Pursuant to a loan extension agreement, on October 30, 2020, the Company issued warrants to purchase 5,000,000 of common stock, at an exercise price of $0.05 per share, expiring on January 6, 2023. The fair value of the issued warrants was recorded as a debt discount of $166,289 and monthly amortization of $4,614.14.

 

 

  (vii) On December 1, 2021, the Company signed an amended loan agreement with third party for $2,085,432, which combined credit note I, II and III and accrued interest on those amounts. The loan bears interest at 10% per annum and has maturity date of December 31, 2022. The note holds a security interest against the 25% Working Interest in the Cona assets and a security guarantee of a working interest in the Utikuma oil field and a working interest in the TLSAU field.
     
  (viii) 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 12, 2021, the Company entered into an amended loan agreement in the amount of $416,900 that consolidated these amounts. The loan bears interest at 10% per annum and has a maturity date of December 31, 2021. On August 31, 2021, this loan was in default due to missed interest payments, and a default interest rate was applied to the principal balance.
     
  (ix) On April 23, 2020, the Company was granted a $56,680 business loan through the Paycheck Protection Program (PPP) administered through the CARES act. The company applied for loan forgiveness, and it was granted on July 26, 2021.
     
  (x) 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 former 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, 2021. As of September 1, 2021, Zel Khan and Quinten Beasley resigned from their positions at Petrolia Energy, so this note has been removed from the related party section. Also, see Note 16. Subsequent Events regarding the dispute of this value.
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE

The following is a schedule of future minimum repayments of notes payable as of December 31, 2021:

 

       
2022   $ 3,535,163  
Thereafter      
Total   $ 3,535,163