Notes Payable and Line of Credit

3 Months Ended

Mar. 31, 2023

Note 5: Notes Payable and Line of Credit

A summary of Notes Payable are as follows:

	March 31, 2023			December 31, 2022

SBA loan May 2020	$	143,901		$	144,739
Note payable September 2021		626,950			635,658
Note Payable September 2022		-			52,475
Total notes payable		770,051			832,872
Less: discount and deferred finance costs		(87,385	)		(94,095	)
Less: current portion		(120,162	)		(158,672	)
Long-term portion of notes payable	$	563,304			580,105

On June 2, 2020, the Company received $150,000 under the Small Business Administration’s Economic Injury Disaster Loan. The loan bears interest at a fixed rate of 3.75%, and matures on May 26, 2050, payable monthly with payments of $731 beginning twelve months after issuance. The loan gives the Small Business Administration a security interest in all assets of the Company. As of March 31, 2023 and December 31, 2022, the Company owed a principal amount of $143,901 and $144,739 under this loan.

On September 29, 2021, the Company entered into a Revenue Loan and Security Agreement with an investor for up to a total amount of $1,000,000. Upon drawing from the facility and continuing thereafter until maturity or earlier prepayment in full, the Company shall pay monthly to the lender an amount equal to the product of (i) all revenue of the Company for the immediately preceding month multiplied by (ii) an applicable revenue percentage. On September 29, 2021, the Company borrowed $750,000 under the agreement and received initial cash proceeds of $727,500. The Company also paid an additional $5,000 in fees to the investor to secure the loan for total deferred financing fees of $27,500. On November 12, 2021, the Company issued a total of 843,750 shares of common stock to a lender in connection with the note payable issued. These shares had a fair value of $100,744 and were recorded as deferred finance costs. As of March 31, 2023 and December 31, 2022, the Company owed a principal amount of $635,658 and $730,783 under this loan, with remaining unamortized discount of $94,095 and $121,310, respectively.

In December 2022, the Company received cash proceeds of $52,475 under an unsecured short term financing agreement. The Company repaid the loan in full during the three months ended March 31, 2023.

On March 30^th, 2023, the Company entered into a line of credit agreement with a principal amount of $50,000, which was drawn in full as of March 31, 2023. The line of credit is unsecure, bears interest at 10% and matures on June 30, 2023. The Company paid $1,000 in deferred finance costs associated with the loan.

The Company amortized $7,711 and $49,980 of debt discount and deferred finance costs to interest expense related to notes payable and the line of credit during the three months ended March 31, 2023 and 2022, respectively.

Accrued interest on notes payable was $202,550 and $168,855 as of March 31, 2023 and December 31, 2022, respectively.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 235
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Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1B

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Topic 470
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-Section 50
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+ Details

Jacksam Corp 10-Q