NOTES PAYABLE

12 Months Ended

Dec. 31, 2023

NOTE 6 - NOTES PAYABLE

Notes payable consist of the following at:

	December 31, 2023			December 31, 2022
Note payable, secured, 12% interest, due June 2024	$	-		$	70,920
Note payable, secured, 12% interest, due June 2024		300,000			300,000
Notes payable, secured, 12% interest, due April 2022		95,000			95,000
Note payable, secured, 30% interest, due June 8, 2022		-			125,000
Notes payable, secured, 12% interest, due December 2023		10,000			10,000
Notes payable, unsecured, 8% interest, due on demand		-			13,000
Notes payable, secured, 12% interest, due June 2024		-			140,920
Notes payable, 12% interest, due starting August 2024		625,000			-
Total notes Payable		1,030,000			754,840
Less unamortized debt discounts		-			(58,437	)
Total Notes Payable		1,030,000			696,403
Less current portion		(1,030,000	)		(572,262	)
Total Notes Payable - long term	$	-		$	124,141

On September 11, 2020, the Company issued $160,000 of principal amount of 12% secured convertible promissory notes and warrants to purchase common stock. On January 30, 2019, the Company issued a $100,000 12% promissory note. The note was due on December 31, 2019. On January 1, 2020, the Company entered into an agreement to consolidate the above two notes payable dated September 11, 2018 and January 30, 2019 into one $260,000, 12% note due September 1, 2022. As consideration the Company issued the note holder 175,000 shares of common stock valued at $61,250, which was recognized as a financing cost. The Company evaluated the modification under ASC 470-50 and determined that the modifications were considered substantial and qualified for extinguishment accounting under such guidance. As such, the Company recorded a loss on extinguishment of debt of $61,250 associated with the excess reacquisition cost of the new debt over the carrying value of the original debt. On May 1, 2022, for the issuance of 25,000 shares valued at $29,000 on the date of commitment, the loan was further extended to September 1, 2024. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 414,120 shares of common stock valued at $62,118. As of December 31, 2023 and December 31, 2022, the balance of the note was $0 and $70,920, respectively.

On January 1, 2020, the Company entered into an agreement to consolidate three notes payable above dated September 2, 2016 and February 2, 2018 into one $300,000, 12% note due September 1, 2021. As consideration the Company issued the note holder 175,000 shares of common stock valued at $61,250 which was recorded as financing expense. On May 1, 2022, for the issuance of 25,000 shares valued at $29,000 on the date of commitment, the loan was further extended to September 1, 2024. The Company evaluated the modification under ASC 470-50 and determined that the modifications were considered substantial and qualified for extinguishment accounting under such guidance. As such the Company recorded a loss on extinguishment of debt of $61,250 associated with the excess reacquisition cost of the new debt over the carrying value of the original debt. As of December 31, 2023 and December 31, 2022 the balance of the note was $300,000 and $300,000, respectively.

On January 8, 2021, the Company entered into a $125,000, 30% note payable due on June 8, 2021. Under the note the Company must make interest only payments of $3,125 starting on February 10, 2021 and continuing through maturity. On December 31, 2021, the noteholder extended the due date to June 8, 2022 for $1,250. On September 1, 2023, the noteholder sold the ownership of the note to an entity under common ownership of a related party who concurrently amended the terms of the note with the Company to accrue interest and to extend the maturity date of the note to August 31, 2025. This assignment makes this a related party note for the year ended December 31, 2023 and has been disclosed in the related party note (see Note 5 - notes payable – related parties). As of December 31, 2023 and 2022 the balance of the note was $0 and $125,000, respectively.

On April 26, 2021, the Company entered into a $95,000, 12% note payable due on April 26, 2022. As of December 31, 2023, and December 31, 2022 the balance of the note was $95,000 and $95,000, respectively.

On August 18, 2021, the Company entered into a $10,000, 12% note payable due on August 18, 2022. On April 10, 2022 the note was amended to have a due date of December 7, 2023. As of December 31, 2023 and 2022 the balance of the note was $10,000 and $10,000, respectively.

On May 12, 2021, the Company entered into a $103,000, 24% note payable due on September 12, 2021.

On July 12, 2021, the Company entered into a $98,000, 12% note payable due on November 12, 2021.

On November 12, 2021, the Company entered into an agreement to consolidate the two notes payable above dated May 12, 2021 and July 12, 2021 into one $201,000, 12% note due December 15, 2023. As consideration the Company issued the note holder 100,000 shares of common stock valued at $125,000 which was recorded as financing expense. The Company evaluated the modification under ASC 470-50 and determined that the modifications were considered substantial and qualified for extinguishment accounting under such guidance. As such the Company recorded a gain on extinguishment of debt of $15,643 associated with the deficit reacquisition cost of the new debt over the carrying value of the original debt. On May 1, 2022, for the issuance of 100,000 shares valued at $87,000 on the date of commitment, the loan was further extended to September 1, 2024. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 1,230,911 shares of common stock valued at $184,636. As of December 31, 2023 and 2022, the balance of the note was $0 and $201,000, respectively.

On November 4, 2021, the Company entered into a $25,000, 0% note payable due on demand. The note was repaid during the year ended December 31, 2023. As of December 31, 2023, and 2022, the balance of the note was $0 and $13,000, respectively.

On August 3, 2023 the Company’s wholly owned subsidiary initiated an offering of 12% Notes with maturity dates starting on August 3, 2024. As of December 31, 2023, the Company has raised $625,000 under the offering.

Interest expense including amortization of the associated debt discount for the year ended December 31, 2023 and 2022 was $143,417 and $129,952, respectively.

Convertible notes payable, net of debt discount consist of the following:

	December 31, 2023			December 31, 2022
Convertible note payable, secured, 12% interest, due August 31, 2019, in default	$	50,000		$	50,000
Convertible note payable, secured, 12% interest, due May 2, 2024		-			100,000
Convertible note payable, secured, 10% interest, due February 2024		45,000			45,000
Convertible note payable, secured, 10% interest, due May 22, 2020, in default		-			5,000
Convertible note payable, secured, 12% interest, due Feb 15, 2024		75,000			75,000
Convertible notes payable, secured, 4% interest, due October 14, 2020, in default		75,000			75,000
Convertible note payable ,12% interest, due May 2020, in default		108,500			162,750
Convertible note payable, secured, 10% interest, due May 1, 2024		350,000			350,000
Convertible note payable, secured, 12% interest, due February 8, 2024		-			95,000
Convertible notes payable, secured, 4% interest, due March 3, 2021, in default		25,000			25,000
Convertible notes payable, secured, 10% interest, due December 2021, in default		-			10,000
Convertible notes payable, 8% interest, due December 2023		295,000			355,000
Convertible notes payable, 8% interest, due July 2023		-			38,200
Total notes payable		1,023,500			1,385,950
Less unamortized discounts		(14,520	)		(182,661	)
Total convertible notes payable, net		1,008,980			1,203,289
Less current portion		(1,008,980	)		(911,249	)
Convertible notes payable, net – long-term	$	-		$	292,040

On September 2, 2016, the Company issued $50,000 of principal amount of 12% secured convertible promissory notes and 6,250 warrants to purchase common stock (post-split). The note was due on August 31, 2018, was later extended to August 31, 2019, bears interest of twelve percent (12%) and is currently in default. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $8.00 per share (post-split). The notes were issued with warrants to purchase up to 6,250 shares of the Company’s common stock at an exercise price of $12 per share (post-split). As of December 31, 2023 and 2022 the balance of the note was $50,000 and $50,000, respectively.

On May 2, 2017, the Company issued $100,000 of principal amount of 10% secured convertible promissory notes and 20,000 warrants to purchase common stock. The note was due on May 2, 2020 and is secured by the Company’s accounts receivable and inventory and on August 1, 2020, for the issuance of $6,250 shares (post-split) valued at $10,000 based on market value of the shares of $1.6 (post-split) on the date of issuance, was further extended to February 1, 2021, and was again extended on April 20, 2021 to May 2, 2022 for the 12,500 shares (post-split) valued at $17,000, which is included in stock payable. On May 1, 2022, for the issuance of 12,500 shares valued at $14,500 on the date of commitment, the loan was further extended to May 1, 2023. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $4 per share (post-split). The notes were issued with warrants to purchase up to 10,000 shares of the Company’s common stock at an exercise price of $8.00 per share (post-split). On May 2, 2023 the noteholder agreed to extend the maturity date of the note to May 2, 2024. As consideration for the extension, the Company agreed to increase the interest rate to 12% and to issue the noteholder 12,500 shares of common stock. As of December 31, 2023, the shares have not been issued. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 1,200,954 shares of common stock valued at $180,143. As of December 31, 2023 and 2022 the balance of the note was $0 and $100,000, respectively.

On May 2, 2017, the Company issued $50,000 of principal amount of 10% secured convertible promissory notes and 10,000 warrants to purchase common stock. The note was due on May 2, 2020 and is secured by the Company’s accounts receivable and inventory. On April 22, 2020, the note was extended to May 2, 2021. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $4 per share (post-split). The notes were issued with warrants to purchase up to 1,250 shares (post-split) of the Company’s common stock at an exercise price of $8.00 per share (post-split). One December 31, 2021 the note was amended to cease accruing interest as of May 1,2022 and the due date of the note was amended to April 1, 2023 and on February 8, 2023 the note was extended to February 8, 2024. As of December 31, 2023 and 2022, the balance of the note was $45,000 and $45,000, respectively.

On May 22, 2017, the Company issued $5,000 of principal amount of 10% secured convertible promissory notes and 125 warrants (post-split) to purchase common stock at an exercise price of $8 (post-split). The note was due on May 22, 2020 and is currently in default secured by the Company’s accounts receivable and inventory. The outstanding principal amounts and accrued but unpaid interest of the notes is convertible at any time at the option of the holder into common stock at a conversion price of $0.50 per share. The notes were issued with warrants to purchase up to 125 shares of the Company’s common stock at an exercise price of $8.00 per share (post-split). During the year ended December 31, 2023, the note was paid in full.

On February 15, 2018, the Company issued a $75,000 12% secured convertible promissory note. The note was due on February 24, 2020 and is secured by the Company’s accounts receivable and inventory. On April 22, 2020, the due date of the note was extended to February 15, 2021 for the issuance of 6,250 shares of common stock (post-split) valued at $8,995 and is currently in default. On February 22, 2022 the due date of the note was further extended to February 15, 2024. As of December 31, 2023 and 2022, the balance of the note was $75,000 and $75,000, respectively.

On February 8, 2019, the Company issued a $50,000 10% convertible note. The note was due on February 8, 2020 and is currently in default. As an incentive to enter into the agreement, the noteholder was also granted 7,500 shares valued at $30,000, which was recognized as a debt discount. As of December 31, 2023 and 2022, the balance of the note was $50,000 and $50,000, respectively.

On February 19, 2019, the Company issued a $25,000 4% convertible note. The note was due on August 19, 2019 and is convertible at a rate of $4 per share (post-split). On February 14, 2019, the noteholder agreed to extend the note through October 14, 2020. As an incentive to enter into the agreement, the noteholder was also granted 625 shares (post-split) valued at $2,500, which was recognized as a debt discount. As of December 31, 2021, the shares have not been issued and were included in stock payable. As of December 31, 2023, the note was shown net of unamortized discount of $0. As of December 31, 2023 and 2022, the balance of the note was $25,000 and $25,000, respectively.

On November 19, 2019, the Company entered in to a $281,000 convertible note payable, including an original issue discount of $28,100 convertible promissory note pursuant to which $150,000 was borrowed, including a $18,500 discount during the year ended December 31, 2019. Interest under the convertible promissory note is 12% per annum, and the principal and all accrued but unpaid interest is due 180 days from funding, which has July 19, 2020 for the first tranche. On May 20, 2020, the noteholder agreed to extend the due date of the first tranche of funding until July 19, 2020 and is currently past due. The note is convertible at the lesser of (i) 70% multiplied by the lowest Trading Price during the previous twenty-five (25) trading day period ending on the latest complete Trading Day prior to the date of the note and 70% of the market price with a floor of $0.01. As an incentive to enter into the agreement, the noteholder was also granted 53,375 shares (post-split) valued at $175,070 As of December 31, 2023 and 2022, the balance of the note was $108,500 and $162,750, respectively.

On May 5, 2020, the Company issued a $350,000 10% convertible note. The note is due on May 1, 2021 and is convertible at a rate of $1 per share (post-split). As an incentive to enter into the agreement the noteholder was also granted 187,500 shares (post-split) valued at $207,000, which was recognized as a debt discount. On April 21, 2021, the noteholder agreed to extend the note through May 1, 2022. As an incentive to enter into the agreement, the noteholder was also granted 12,500 shares (post-split) valued at $20,000, which was recognized as financing expense. On May 1, 2022, for the issuance of 75,000 shares valued at $87,000 on the date of commitment, the loan was further extended to May 1, 2024. As of December 31, 2023 and 2022, the balance of the note was $350,000 and $350,000, respectively.

On February 8, 2021, the Company entered into an agreement to consolidate two notes payable above dated September 17, 2018 and February 8, 2019 into one $100,000, 12% note due February 8, 2022. The note is convertible into shares of common stock at a conversion price of $0.80 per share (post-split). As consideration the Company issued the note holder 12,500 shares of common stock (post-split) valued at $20,000 which was recorded as financing expense. As of the December 31, 2021, the shares were not issued and included in stock payable. The Company evaluated the modification under ASC 470-50 and determined that the modifications were considered substantial and qualified for extinguishment accounting under such guidance. As such the Company recorded a loss on extinguishment of debt of $20,000 associated with the excess reacquisition cost of the new debt over the carrying value of the original debt. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 824,676 shares of common stock valued at $123,701. As of December 31, 2023 and 2022, the balance of the note was $0 and $100,000, respectively.

On March 3, 2021, the Company issued a $25,000 4% convertible note. The note is due on March 3, 2022 and is convertible at a rate of $0.80 per share (post-split). As of December 31, 2023 and 2022, the balance of the note was $25,000 and $25,000, respectively.

On February 22, 2022 the Company entered into a $385,000, 12% note payable due on February 22, 2023. The note is convertible upon default at the higher of the closing price of the common stock on the closing date, or par value. As an inducement to enter into the agreement the Company also granted the noteholder 165,216 shares of common stock (post-split). The issuance of the note and shares resulted in a total debt discount of $158,147, with $123,147 attributable to the shares. On February 8, 2023, the note was extended to December 31, 2023. During the year ended December 31, 2023, the Company made principal payments totaling $60,000. As of December 31, 2023 and 2022, the balance of the note was $295,000 and $355,000.

On July 18, 2022, the Company entered into a $150,000 8% convertible grid note. The note is due on July 18, 2023 and is convertible at a rate of $0.80 per share (post-split). During the year ending December 31, 2023, the Company received $4,000 in advances from the note. During the year ended December 31, 2023, the Company converted the balance of the note and accrued interest into 2,254,986 shares of common stock valued at $45,100. As of December 31, 2023 and December 31, 2022, the balance of the note was $0 and $38,200, respectively.

Interest expense including financing cost and amortization of the associated debt discount on all of the above convertible notes for the year ended December 31, 2023 and 2022 was $115,506 and $151,860, 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
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Trutankless, Inc. 10-K/A